Case Study: Family Finance (Case Study Sample)

Case Study: Family Finance Name: School Affiliation: Case Study: Family Finance Introduction Due to the many needs that a human being has, it is usually impossible to fulfill all the needs with the available resources. In addition, people usually have problems on which need to satisfy first and this may make some of them committing themselves to activities that that will incur more costs than they make. This usually results to the people having a lot of financial problems including debts which make them suffer a lot. It is therefore necessary for people to learn how to manage their resources so as to avoid such problems. This paper will look at this case and propose the way forward for the couple Case Analysis Kelvin and Alex is a couple who are in their early forties. Kelvin runs his own IT business from home. His gross income is 85000 dollars. On the other hand, Alex is an executive worker in a media company and she grosses 190000 dollars per year. In addition, she also expects to receive a 20000 bonus. She intends to use that bonus as a concessional contribution in her superannuation. Despite the large amount of money that Kelvin and Alex earn, they are not able to meet their monthly expenses. They are debtors to various organizations and also individuals including the parents to Alex. In addition, the couple has three children in private school who also incur a lot of expenses. The couple has various problems and if the situation is not taken into proper consideration, this situation is going to worsen in the near future. The problems faced by the couple at the present and the future Kelvin and Alex are facing a lot of problems as far as finances are concerned. By the fact that they are not earning much makes these problems devastating and if the situation is not properly checked, the problems may worsen in the near future. First, the couple is paying off mortgage on their home at a cost of 6.978 dollars per month. The rate of the mortgage is 7.75 percent per annum meaning that meaning that the amount that they will be paying for the loan will keep on increasing for the next twenty years. Their three children are all in a private school and hence they have to cater for their school fees which amount to 65000 dollars per year. The term is almost starting but they don’t have an idea where the school fees will come from as they are very unstable at the moment. This implies there is a high possibility of the children failing to resume to school or being sent home from school due to lack of paying the school fees. They are both servicing loans for their two cars for a total of 2791 dollars per month. The cars have more years to be paid for and hence the couple is likely to be having financial problems in paying the loan considering their financial position. Since the couple owns a joint tenant, they also pay which is an investment unit, they have to pay 700 dollars per month. Again, considering their financial stability at the moment, this investment is likely to collapse in the near future as they will not be able to meet the monthly contribution unless a solution to their the problems is found. Kelvin contributes 13000 dollars per year a concessional contribution to his self managed superfund. In addition, he usually deposits 10000 dollars for his business in case he needs cash due to various circumstances. On the other hand, Alex contributes 10000 dollars per year for her superannuation. Unless the couple get other sources of money, to cater for all these expenses will be a big problem in the near future. This implies they will end up terminating most of the contracts they have made which will in return affect their already unstable financial state. Alex has a debt to her parents of 11000 dollars and she has to pay the debt as her parents are also under financial problems due to losing heavily on the global financial crisis and also due to the heavy medical bill that they are incurring. Kelvin’s father is critically ill is he is going to be hospitalized within the next one year. This implies that the cost of treated is to be met by the couple and has to be available in the next one year. This become a big challenge for them The other problem that Kelvin and Alex are facing is that the credit card is worsening each month. This is a big problem to them as in the near future the value of the credit card would be so devastating. Lastly, Alex’ brother is bringing problem to the couple. By the fact that he is being accommodated by the couple, he is not assisting the couple financially as he is trying to buy her own property. Proposed steps to remedy their situation In today’s time, improving the financial position of someone is not as difficult as many people tend to think. It only requires someone to have a solid plan as well as the personal drive to take you through. In order for Kelvin and Alex to improve their financial position and reduce their problems, they have to take some steps. Failure to that, their financial condition will deteriorate and become even worse than it is now. First the couple should take a step of revisiting their spending habits. It is evident that the spending habit for the couple is poor considering the amount the couple is earning. Kelvin and Alex earn 8500 dollars and 190000 dollars respectively. Nevertheless, they spend a total of per month. This makes the couple to have a lot of challenges. Creating a good budget goes hand in hand with helping people to improve their financial position. The couple should hence restructure their spending habit to avoid unnecessary spending which can result to wastage of money. The other step that the couple should take is to avoid debt as this is one of the keys to achieving prosperity financially. It is clear that the couple has a lot of debts. These include loans on car and mortgage loans for their home. In addition, Alex owes her mother 11000.Some of these loans are avoidable or else they can be minimized. Lastly, the couple should avoid credit card debt. The credit card of the couple is losing value each month and if the couple avoids use of credit card, their financial position will be improved to some extent. The above steps are highly needed by the couple to help them be able to manage their funds are reduce the financial challenges that they are facing at the moment. In addition, the couple will also be able utilize all their money in the right manner, prioritizing on what should be done first. When the couple follow these steps they is high possibility that their financial position will drastically improve and this will see the couple to greater heights and even be able to do greater things while earning the same amount of salary. Actions to Improve their Position Immediate actions need to be taken by Kelvin and Alex for them to improve their financial position. First, it is a fact that their children are in private school. Being in a private school means that the school fees is quite higher as compared to public school. Since the couple does not know where the school fees for the next term are coming from, they should make an effort of transferring their children to public school. This will greatly reduce the family expenses and the children will still be in school. Alternatively, the couple should consider the little they have to pay the fees of the private school on monthly basis. This will help as the private school that the children are currently attending offers a 10% discount on those who pay fees on monthly basis. This means that the couple will pay a total of 58500 dollars instead of the possible 65000 dollars per year. The amount saved as a result of paying on monthly basis is quite significant and can be used for other productive activities. This will help the couple reduce its monthly expenses which will in turn improve their financial position from the state that it is now. The couple should also involve Kelvin’s brother in contributing to family expenses. Although he is on saving mode to buy his own property, he should be involved in contributing something little as he has no other expense since he is given accommodation by the couple. The little that Kelvin’s brother will contribute will help the couple to some extent reduce their monthly expense. Alternatively, the couple can also help him in finding a better job. This will make him buy his own properties and be independent of himself. With Kelvin’s brother on his own, the family can significantly cut on monthly expense on food, clothes and any other expense that Kelvin’s brother is incurring. Again, this wi...