From a financial planner prospective. Assume your clients; Joey and Kristy have

Question

From a financial planner prospective.

Assume your clients; Joey and Kristy have multiple objectives requiring monthly cash flows of $400 dollars, $250 dollars, $150 dollars, $750 dollars, and $325 dollars, respectively. Also assume that their current net cash flow per month is $380 dollars.

A. What technique would you use to bring Joey and Kristy into econmic reality?

B. How bould you distinguish between need and want objectives?

C. Where might you look for additional available cash flows to meet their objectives?

Explanation / Answer

a) The best tehcnique is to bring them to close to reality by showing them the importance of cash flows and savings if they are out of cash. Some hypothetical scenarios can be created to show them the importance of saving cash so that their monthly cash flow stream can be retained.

b) Need and Want Objective can be distinguished by only giving them some insights regarding the objective for their purchases. Necessities can be need objectives whereas luxury goods can be want objectives.

c) Short term loans can be looked for additional cash flows to meet their objectives.

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