Mariah is single and has a monthly disposable income of $3,200. Her monthly cash outflow is approximately $2,800. Mariah includes contributions to a retirement plan and money for investments as part of her cash outflow. She has car insurance and a life insurance policy. Mariah has saved $15,000, but wishes to use $10,000 for a down payment on a house. She has also purchased furnishings for a house, which she has in the spare bedroom of her apartment. Mariah hires a financial planner to examine her money management, and he determines that her plan needs work. What part of Mariah’s financial plan would he encourage her to work on and why?
Answers
Answer:
Step-by-step explanation:
We have three sections of Mariah's finance.
1) The income
2) The savings
3) The expenditure
From the cash outflow we see that the percentage savings is :
3200 -2800 = 400
Given that the cash outflow incudes investments and contributions to a retirement plan then at this point Mariah is doing well.
However we have a challenge when it comes to spending on her savings.
Given that she spends a big chunk of her savings then something needs to be done.
1) She does not need to buy furnishings for her house before completing the payment for the house. This is something she could do monthly.
2) She may decide to finance the buying of the house from part of her investment returns and not the savings.
Therefore Mariah should use her savings wisely by investing the savings and not buying items.