FOBE320 Case Study
Part 1: The first two things they should do
Based on the case, the first two things they need to do are that they need to set their financial goals and use the budgeting mechanism.
• For the financial goals, they should set short term goals, for example, they save money to buy clothes for their children. Medium term goals are also important, like pay off their personal loans. Setting long term goals may need more thinking, for instance, they can saving money to pay off their long term loans and they can consider invest in a new venture. It is difficult to set a reliable and realistic financial goals, they should understand their financial position and environment. Setting these goals will guide their actions and give the right direction to control their finance.
• For the budgeting mechanism, it is significant to record their accurate financial account and keep the data up to date during the budgeting process. In this process, it is also necessary to analyze their financial structure, for example, their take home income, their financial expense, bills expense and living expense. The asset and liability part in the budget helps them to understand their financial position. Budgeting is a good control tool, as long as they use this tool efficiently, it will make them manage their fiance easier and contribute to meet their financial goals.
Part 2: Their current financial situation and overall position
Take home income
• For David, he has a IT business and he earns 85000 before tax and any other deductions, he also has a self managed superfund with 65000 in cash and he sacrifices a further 5000 above the 9%p.a. So his total assessable income should be 145000 and his tax expense should be 41597, by deducting the tax expense from the assessable income, his take home pay should be 103403.
• For the wife Jennifer, she works in media earning 135000 before tax, she also has 167000 superannuation and salary sacrifices 10000p.a. Based on this, she should be has
Based on the case, the first two things they need to do are that they need to set their financial goals and use the budgeting mechanism.
• For the financial goals, they should set short term goals, for example, they save money to buy clothes for their children. Medium term goals are also important, like pay off their personal loans. Setting long term goals may need more thinking, for instance, they can saving money to pay off their long term loans and they can consider invest in a new venture. It is difficult to set a reliable and realistic financial goals, they should understand their financial position and environment. Setting these goals will guide their actions and give the right direction to control their finance.
• For the budgeting mechanism, it is significant to record their accurate financial account and keep the data up to date during the budgeting process. In this process, it is also necessary to analyze their financial structure, for example, their take home income, their financial expense, bills expense and living expense. The asset and liability part in the budget helps them to understand their financial position. Budgeting is a good control tool, as long as they use this tool efficiently, it will make them manage their fiance easier and contribute to meet their financial goals.
Part 2: Their current financial situation and overall position
Take home income
• For David, he has a IT business and he earns 85000 before tax and any other deductions, he also has a self managed superfund with 65000 in cash and he sacrifices a further 5000 above the 9%p.a. So his total assessable income should be 145000 and his tax expense should be 41597, by deducting the tax expense from the assessable income, his take home pay should be 103403.
• For the wife Jennifer, she works in media earning 135000 before tax, she also has 167000 superannuation and salary sacrifices 10000p.a. Based on this, she should be has