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Financial Planning Balance Sheet Exercise
Consider the following sample financial balance sheets drawn from actual consulting expereince, and see if you can match the balance sheet to the appropriate individual from the following choices: (1) secretary age 70 (2) college vice president age 52 (3) faculty member age 57..
| Employee No. 1 | |||
| Assets | Liabilities | ||
| Home | $225,000.00 | Mortgage | $150,000.00 |
| Furnishings | $35,000.00 | ||
| Checking/Savings | $4,500.00 | ||
| Stock Account 1 | $155,000.00 | ||
| Stock Account 2 | $873,000.00 | ||
| Stock Account 3 | $180,000.00 | Net Worth | $2,793,500.00 |
| IRA Accounts | $545,000.00 | ||
| Qualified Annuities | $330,000.00 | ||
| Autos | $6,000.00 | ||
| Insurance | $30,000.00 | ||
| TIAA CREF | $560,000.00 | ||
| Total Assets | $2,943,500.00 | Total Lia.+NW | $2,943,500.00 |
| Employee 2 | |||
| Assets | Liabilities | ||
| Home | $225,000.00 | Mortgage | $150,000.00 |
| Furnishings | $45,000.00 | Credit Cards | $35,000.00 |
| TIAA CREF | $334,000.00 | Auto Loans | $18,000.00 |
| Autos | $25,000.00 | Total Liabilities | $203,000.00 |
| Net Worth | $426,000.00 | ||
| Total Assets | $629,000.00 | Total Lia + NW | $629,000.00 |
| Employee 3 | |||
| Assets | Liabilities | ||
| Home | $150,000.00 | ||
| Investment Acct 1 | $387,000.00 | ||
| Investment Acct 2 | $1,545,000.00 | ||
| IBM Stock | $42,000.00 | ||
| IRA | $192,000.00 | ||
| TIAA CREF | $752,000.00 | Net Worth | $3,479,000.00 |
| Savings Acct. | $86,000.00 | ||
| Insurance/Annuities | $219,000.00 | ||
| Jewelry, Furnishings | $106,000.00 | ||
| $3,479,000.00 | Total Lia. + NW | $3,479,000.00 | |
| Correct Answers: Secretary - Age 70 | Employee | 3 | |
| College Vice President - Age 52 Employee | 2 | ||
| Faculty Member - Age 57 Employee | 1 | ||
Why do you think these particular balance sheets wound up describing these individuals?
What choices did each individual have to make in order for this to happen?
© Dr. Andrew F. Thompson, All Rights
Reserved, 8/2/2007