Financial Planning Case Study: Analysis of Peter's Family Goals

This case study analyzes the financial planning strategies for Peter and his family, focusing on their goals of paying off a $350,000 mortgage within ten years, taking an annual vacation, and increasing their direct investments to $200,000. The report examines the importance of financial planning, the role of a financial planner, and strategies such as cash flow analysis, budgeting, saving, taxation, and insurance. It highlights the benefits of combining income, the importance of insurance, and the advantages and disadvantages of early mortgage payment. The report also provides insights into investment strategies and portfolio management, offering a comprehensive overview of how Peter and his wife can achieve their financial objectives through careful planning and expert guidance. The document emphasizes the necessity of a financial plan for managing income, increasing cash flow, and ensuring financial security. It also discusses the role of financial planners in offering expert advice and creating strategies to achieve financial goals.

FINANCIAL PLANNING, CASE STUDY 1
FINANCIAL PLANNING
Name
Institution
Date

FINANCIAL PLANNING, CASE STUDY 2
EXECUTIVE SUMMARY
This paper is going to discuss a report on financial planning strategies of an individual a
case study of Peter's family. Some people may think that financial planners are only used to plan
for investments but it goes behold that, individual financial planning can also be done by a
financial planner regarding the situation. The role of a financial planner is to manage finances in
an organized manner by easing the complicated financial situation a financial planner can also be
hired to combine the finances of a couple; they use the expertise and critical strategies to plan on
finances. Financial planners consider individual life objectives and goals of the client and the
strategies that are being used to achieve the goals. This report will analyze various ways to blend
the finances of Peter and his wife as well as their insurance needs while assisting them to achieve
their set goals of paying off their housing mortgage within a period of ten years, take his family
on a vacation once a year and also the goal of increasing shares in direct investments to an
amount of $200,000. Combining the income from Peter and his wife is a good strategy for
increasing the base rate amount available. The higher the available cash the higher the rate if
investment and saving. This report is also going to discuss various strategies to be adopted when
creating financial planning. The following are importance explaining why its always necessary to
hire a financial planner

FINANCIAL PLANNING, CASE STUDY 3
Table of Contents
EXECUTIVE SUMMARY.............................................................................................................4
1.1. Importance of financial planning..........................................................................................4
1.2. Roles of a financial planner..................................................................................................5
2. Analysis of peters set goals..........................................................................................................6
2.1. He wants to pay off a house mortgage...............................................................................6
2.2. Peter also wants to make sure that he goes on a vacation with his family once a year.......7
2.3. Increasing his direct investments in shares to $ 200,000..................................................8
3. Overall peters’ situation...............................................................................................................8
4. Financial planning strategies that the peters’ should adopt.......................................................10
4.1Cash flow analysis................................................................................................................10
4.2. Preparing a budget..............................................................................................................10
4.3. Access loans........................................................................................................................11
4.4.Adopt Saving strategies.......................................................................................................11
4.5.Taxation position..................................................................................................................12
4.6. Register with health insurance plan....................................................................................12
4.7. A budget for emergencies...................................................................................................13
References......................................................................................................................................14

FINANCIAL PLANNING, CASE STUDY 4
1.1. Importance of financial planning
1. Financial planning assists to manage the income earned by preparing a budget which will
operate all through and exact amounts to be spent on each sector of expenses.
2. Planning helps in increasing available capital due to an increase in the cash flow which is
usually increased by proper monitoring of the expenses. Minimization of expenses while
maximizing the amount of income to increase the total monthly cash flow. To increase
the monthly income there is usually a need for increasing the level of investment
3. It necessitates the importance of insurance which helps improve a sense of security and
peace of mind to the entire family. Health insurance helps to save on medication. Paying
medical bills with cash is a bit expensive and inconvenient. In cases of fatal diseases, it
can be difficult to afford and situations like that lead to bankruptcy. By budgeting,
insurance coverage helps protect the budget and also give a sense of security to the
family and good health care.
4. It helps to understand how finances have been spent to ensure that there is no wastage of
funds. Having money without a budget or any plan can be risky because it can lead to
misuse of funds especially for the spendthrifts. When funds are just spent anyhow it is
impossible to remember how the money was spent but a plan or a budget can give a
summary of how the money has been spent,
5. Financial planning emphasis’s on saving which can ensure stable living standards in a
case where you are not able to work. According to research, those people who have a

FINANCIAL PLANNING, CASE STUDY 5
good culture of saving funds are successful. Even when savings are done in small
amounts it turns out to be a lump sum after some period. Savings are very important
because in case of a contingency, savings account can be utilized to settle the emergency.
A case where there is an emergency then there is no money to cater for it, then it can lead
to the borrowing of a loan which will cause problems during payments since it has to be
fixed in the budget in order to settle the loan. This will discourage saving for a while to
facilitate payment of the loan.
6. A quality financial plan should put in place a piece of advice on investment, for example,
the levels of risk, risk tolerance and also give a guideline on proper investment.
Sometimes the market is usually risky to invest because of fluctuations, therefore its
usually advisable to get advice about the market situation from a financial expert. He/she
will help to explain the risks in the market, tolerance to risk and other important concerns
in the market.
1.2. Roles of a financial planner
 It’s the role of the financial planner to determine all the information that will be required
to develop a plan. This information includes income, client’s financial objectives,
expenses; the status of tax, insurance coverage, tolerance to risk, etc. clients should
work with planners who they can trust with their financial information. on the other
hand, clients should give all information accurately.

FINANCIAL PLANNING, CASE STUDY 6
 The planner has the role of giving the client strategies and advice on financial planning.
Success in financial planning requires someone who knows the strategies of financial
planning because it needs critical analysis and someone who knows what he/ she is
doing. The planner should help the client by giving advice and coming up with
strategies to make the planning a bit different and quality.
 He/she should advise the client on strategies of finance management, planning on
investment, taking insurance cover. It’s the role of the financial planner to identify the
loopholes in the clients’ financial choices and find solutions to the loopholes. The
planner should also analyze the important services which the client has left out. For
example, from the case study the client and has not registered with a life of health
insurance
 Checking the clients set plans from time to time to analyze whether life changes will
affect the financial plan. After setting down the plan of finances, it’s the duty of the
financial planner to keep checking on the report to analyze whether the plan is prone to
change with change in economic changes or whether life changes are affecting the set
plan.
 Developing strategies that will help the client accomplish the set goals and objective
The reason why the client hired an expert is to ensure that he achieves the set goals and
objectives no matter what, therefore the planner should ensure to come with good strategies to
accomplish the set goals
 The responsibility of Preparing interpretation summaries of financial information

FINANCIAL PLANNING, CASE STUDY 7
The financial planner should analyze the financial documents and break them down in the form
of a summary that will be easy to understand and also for further planning of finances. It will
help make the other steps of planning to be done later become easier. This is because the
required data is already analyzed.
 Managing the client’s portfolios. The current clients’ portfolios should be managed and
the client should get a piece of relevant advice about the same. The portfolios are not
bad to invest in but they should not be prioritized. For example. The fund portfolio
according to our case study. It should not be prioritized but the share portfolio can
always be increased because it increases income. Any activity that can be used to
profitably increase Income should be utilized.
2. Analysis of peters set goals
2.1. He wants to pay off a house mortgage
Peter and his family are currently living within a period of ten years. The mortgage
amounts to $ 350,000; the interest rate is 4.5% per annum. For Peter to manage to pay off the
mortgage within the stipulated period of 10 years, he has to make a payment of at least $ 35,000
every year for ten years for him to achieve this goal of owning the house. There is nothing that
feels good like living in a home that’s clean from a mortgage. A home is the only asset that you
can purchase and it continues to appreciate with time. Most assets we purchase just continue
losing their value as time moves on. Therefore this goal of paying off the mortgage is just
perfect. In the case of uncertainties or even loss of job or old age, the family will be comfortable
without extra expenses of paying rent for a living house.

FINANCIAL PLANNING, CASE STUDY 8
Making efforts to pay off a mortgage early while you can still make large amounts of
money is the best choice to make. A mortgage payment should be done by use of the excess
funds that remain after investments, saving for uncertainties, making contributions to insurance,
retirement and all the important expenses. This means payment of mortgage should not be
prioritized over other expenses, it should come last but that does not mean it’s less important the
reason is that it should allow you meet all other expenses and needs before you settle it .if
payment of mortgage makes you strain or even fail to settle basic expenses then it does not make
any sense
Full payment of mortgage helps increase monthly cash flow because it reduces the
expenses to be settled. It also saves you the interest you would have paid by paying the loan for a
long period. Settling the mortgage loan will help peter channel large sums of money to
investment and saving when he will be at his 40s. This will help him get high returns and will
also be possessing his own house. This will help peter increase his retirement funds because the
monthly expenses will be reduced.
Another importance of paying off a mortgage is that it can be used to secure a loan. It
can act as security to secure a loan in case of a need for an emergency or in case you want to get
money to increase investments. Therefore the early payment of mortgage while you still can is a
very important deal. To qualify for a loan by use of a mortgage it’s not necessarily a must that
the loan should be completely paid off. The mortgaging company gives a certain percentage
which when reached the client can qualify for a loan. Although it is not advisable to have so
many debts that require to be settled all at once, it can help to give an alternative when there is an
emergency and there is a shortage of funds.

FINANCIAL PLANNING, CASE STUDY 9
On the other hand, early payment of mortgage has its own disadvantage too. When you
are paying a mortgage, it means that you are not investing and if you are investing then you are
doing it with fewer funds. Through market analysis, there is usually no chance to hold idle
money because it’s usually devalued like every day. The money being used to pay a mortgage
would otherwise be used to invest. Therefore, while you are paying mortgage loan plus interest
which does not give returns you are losing great opportunities of investments which would ha
brought income easing the monthly cash flow.
Some mortgage lenders may also add some charges for early clearance of a mortgage.
This leads to the use of a lot of funds which would have been invested to increase income. When
the total cost payable is calculated it should not be too expensive as compared to what was the
real deal.
Before entering into a mortgage contract it’s important to learn the policies and term of
the mortgage in order to calculate possible losses or expenses which are avoidable. Lack of
understanding of the mortgage policies can lead to disappointments in the future after you
already have entered into the contract and you can quit. A mortgage contract that leads to losses
is not useful at all. The terms of payment should be indicated, the rate of paying the mortgage
loan, terms and conditions. The deal when the client decides to decide to pay off the loan before
the due time of payment. In order to choose the best mortgage plan is important to consult an
expert in real estate to help go through the requirements in that field.

FINANCIAL PLANNING, CASE STUDY 10
2.2. Peter also wants to make sure that he goes on a vacation with his family once a year
While planning for finances, it’s important to also have a plan on how to be happy too. This will
encourage you to work hard and achieve your financial objectives compared to someone else
who is stressed n
By working all through the year and does not have time to relax out of work. Its always good to
enjoy life while we still can. Some people even opt to go for family vacations and holidays,
travel, etc over even payment of a mortgage. This is a good decision for peter to include a
holiday budget for his goals. It will be a good balance of investment life and also the family will
get to enjoy while they still can. These holidays are very important when it comes to children.
An environment away from home and school children relax and refresh minds. A new
environment will expose children to new environments which can be exciting.
Family holidays are important as they help children develop and rest away from school and
home to break the monotony of being in the same place all through. A Family gets to enjoy and
bond together just thinking about themselves away from work. Holidays give full attention of
parents to their children. School can be tiresome and stressful for children and a vacation can
work miracles to manage kids.
2.3. Increasing his direct investments in shares to $ 200,000.
Peter has a goal of increasing his shares portfolio to $200,000. His current share portfolio is of $
20,000. Therefore he needs to increase the shares by $ 180,000. Increasing the investment shares
is significant in that, it will also increase the income from investments. Everyone always aims at
increasing their investment considering that the higher the investment the higher the income and
this helps to increase the cash position at the end of the month. High cash position the bigger the

FINANCIAL PLANNING, CASE STUDY 11
diversity of investment you make. It is brilliant to think about investment because it helps to
boost the total earnings hence helping to provide money and resources towards achieving the set
goals.
By increasing the amount to invest in shares it’s going to give Peter an opportunity of
diversification. He can decide to invest differently; it is usually advisable not to put all eggs in
one basket. The market has a risk during fluctuations as it can lead to losses if you invest
differently the level of risk is also diversified. If one fails the other area makes up for the loss
incurred. Therefore, diversification creates more opportunities for investments.
A good investment should fit the desires of the client and consider his tolerance to risk and
also his target goals and objectives of choosing to do investments. The right type of investment
should be chosen carefully to avoid disappointments in the future. Proper information is
necessary while choosing the type of investment.
3. Overall peters’ situation
Our client peter has a family four, his wife and two young children. He works on a full-time
basis getting earnings amounting to $110,000 per year he is also paying 9.5 % to super
enumeration. His wife is earning $ 60,000 annually working on a part-time basis that is three
days a week. She is also paying 9.5 to super enumeration. Their two children are attending a
public school.
According to the case study, this family has not taken any health insurance which is a big
mistake. This can be termed as a loophole in the peters finances because it’s not secure. Health
insurance is critically important for families because it caters for the treatment of all diseases
affecting the entire family. Diseases are uncertainties therefore very hard to predict so we all

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have to plan for health care by paying insurance health. Getting treatment for some Diseases can
lead to bankruptcy if not budgeted for. Health insurance has various importances for example; it
can assist to settle large hospital bills for expensive treatments which would have made you get
stuck on bills or even bankruptcy. Health care insurance also enables you to stay healthy because
you can always visit health care centers to improve your health anytime you need. The risks of
not having health insurance include; large financial health debts, hospital bills can sometimes be
high and very expensive to afford without insurance. Uncovered patients pay more money and
this can lead to strain in the budget because of large bills. Some diseases like heart-related
diseases can be hard to treat without a medical cover. In case of a disease related to the later then
it can lead to bankruptcy. After spending almost all the available resources, you still lack more
funds to continue getting medical attention; therefore it very keys to have a health insurance
plan.
Secondly, it leads to delayed health care. Patients without insurance hesitate to visit the doctor
because they are afraid that the money needed will be a lot. Delaying to get treatment can lead to
serious health problems as some diseases usually, need immediate attention which when
treatment is delayed they can extend to levels which are hard to heal. A scenario like this will
lead to a disaster as it becomes very expensive to get medical attention. A disease which would
have been prevented turns out to be a disaster. This is when life starts to go wrong. Everything is
lost for medication. Health care bills are the most expensive to make because they can't be
regulated or ignored.
Thirdly, lack of health insurance cover leads to poor quality health care. According to the law,
uninsured patients should not be treated unless it’s an emergency but when the patient stabilizes,
health care is limited to the patient unless they are able to settle the required bills in the hospital.