DREAMS AND REALITIES: BUDGETING FOR A FIRST-YEAR
COLLEGE STUDENT CASE STUDY SOLUTION
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SYNOPSIS
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Elissa, a typical 19-year-old student, has just started university studies and is now confronted by the
financial challenges that many young adults face as they embark on their own life away from home. Her
parents have provided for her education and many basic living expenses, but there are still many unexpected
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costs and social life expenses to plan for. After an interesting conversation about personal finances with her
friends, Elissa had decided to start her own financial plan to resolve some important questions and to set
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some key financial objectives for her future.
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OBJECTIVES
• Recognize the importance of financial planning.
• Use basic personal financial tools for tracking financial situation.
• Develop a personal financial plan
The Case Solution Starts From page 5
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ASSIGNMENT QUESTIONS
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1. Why is it important for Elissa to have a financial plan.
2. Assess Elissa’s financial situation and prepare the following financial statements: balance sheet
monthly income and expense statement, and personal budget.
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3. If Elissa faces unforeseen urgent expenses, what should she do? What strategies can Elissa use to meet
her financial needs with a negative net income balance?
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4. How can Elissa effectively use her credit card to cover necessary expenses?
5. Prepare a financial plan for Elissa.
The Case Solution Starts From page 5
,ANALYSIS
1. Why is it important for Elissa to have a financial plan?
• Goal setting—It helps determine short-term and long-term financial goals, and provides a road map for
achieving these objectives.
• Budgeting—It helps create a budget for income, expenses, and savings to track an individual’s financial
situation and help the person remain on track to reach financial goals.
• Emergency preparedness—It helps a person set an emergency financial plan for urgent expenses such
as medical emergencies and provides a financial safety net during challenging times.
• Debt management—It helps develop strategies for paying off debt.
• Investment strategy—It outlines investment objectives, risk tolerance, and asset allocation strategy.
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• Retirement planning—It helps estimate how much is needed for retirement savings and to develop a
strategy for achieving that target, based on the person’s financial objectives.
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• Tax optimization—A well-thought-out financial plan incorporates tax-efficient strategies to minimize
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The Case Solution Starts From page 5
, EXHIBIT -1: ELISSA’S BEGINNING BALANCE SHEET (IN US$)
Assets Liabilities
Monetary Assets Short-Term Liabilities
Cash 50.00 Credit card 200.00
Loan from grandmother 50.00
Total 50.00 Total 250.00
Household Assets
Car 10,000.00 Long-Term Liabilities
Personal assets 250.00 Loans 0.00
Laptop 2,000.00 Total 0.00
Jewellery 1,000.00 Total liabilities 250.00
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Total 13,250.00 Total net worth 13,050.00
Total Assets 13,300.00 Total Liabilities and Net Worth 13,300.00
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The Case Solution Starts From page 5
COLLEGE STUDENT CASE STUDY SOLUTION
e
pl
SYNOPSIS
m
Sa
Elissa, a typical 19-year-old student, has just started university studies and is now confronted by the
financial challenges that many young adults face as they embark on their own life away from home. Her
parents have provided for her education and many basic living expenses, but there are still many unexpected
n
costs and social life expenses to plan for. After an interesting conversation about personal finances with her
friends, Elissa had decided to start her own financial plan to resolve some important questions and to set
tio
some key financial objectives for her future.
lu
So
OBJECTIVES
• Recognize the importance of financial planning.
• Use basic personal financial tools for tracking financial situation.
• Develop a personal financial plan
The Case Solution Starts From page 5
, e
pl
m
Sa
n
ASSIGNMENT QUESTIONS
tio
1. Why is it important for Elissa to have a financial plan.
2. Assess Elissa’s financial situation and prepare the following financial statements: balance sheet
monthly income and expense statement, and personal budget.
lu
3. If Elissa faces unforeseen urgent expenses, what should she do? What strategies can Elissa use to meet
her financial needs with a negative net income balance?
So
4. How can Elissa effectively use her credit card to cover necessary expenses?
5. Prepare a financial plan for Elissa.
The Case Solution Starts From page 5
,ANALYSIS
1. Why is it important for Elissa to have a financial plan?
• Goal setting—It helps determine short-term and long-term financial goals, and provides a road map for
achieving these objectives.
• Budgeting—It helps create a budget for income, expenses, and savings to track an individual’s financial
situation and help the person remain on track to reach financial goals.
• Emergency preparedness—It helps a person set an emergency financial plan for urgent expenses such
as medical emergencies and provides a financial safety net during challenging times.
• Debt management—It helps develop strategies for paying off debt.
• Investment strategy—It outlines investment objectives, risk tolerance, and asset allocation strategy.
e
• Retirement planning—It helps estimate how much is needed for retirement savings and to develop a
strategy for achieving that target, based on the person’s financial objectives.
pl
• Tax optimization—A well-thought-out financial plan incorporates tax-efficient strategies to minimize
m
Sa
n
tio
lu
So
The Case Solution Starts From page 5
, EXHIBIT -1: ELISSA’S BEGINNING BALANCE SHEET (IN US$)
Assets Liabilities
Monetary Assets Short-Term Liabilities
Cash 50.00 Credit card 200.00
Loan from grandmother 50.00
Total 50.00 Total 250.00
Household Assets
Car 10,000.00 Long-Term Liabilities
Personal assets 250.00 Loans 0.00
Laptop 2,000.00 Total 0.00
Jewellery 1,000.00 Total liabilities 250.00
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Total 13,250.00 Total net worth 13,050.00
Total Assets 13,300.00 Total Liabilities and Net Worth 13,300.00
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The Case Solution Starts From page 5
