Question

Justin is married with one child. He works 40 hours each week at a rate of $16 per hour. His wife began working part time after their daughter was born, but still contributes about $350 to the cash inflow each month. Their monthly cash outflow is generally about $3,000. They have a balance of $2,000 in their savings account. Justin has retirement contributions taken out of his paycheck at work. They have renter’s, car and life insurance coverage. Based on this information, what part of their financial plan should Justin and his wife work on? a. managing income b. managing liquidity c. protecting assets d. retirement

Answer 1

Well 40 times 16 equals $640. He contributes 350 so there is 290 dollars left for food and clothes. Plus there is also 1,000 dollars left as well. They need to work out a plan that they could only use 600 for there food and clothes. The rest should be put away for retirement and college.

Answer 2

Answer: The answer is (a) managing income.

Step-by-step explanation: Given that Justin and his wife have one child. He works 40 hours each week at the rate of $16 per hour, so the earning of Justin per month is

= $16 × 4.5 × 40 = $2880 {approx.}.

Also, his wife earns $350 each month.

Therefore, total cash inflow in the family is

Cash inflow = $2880+$350 = $3230.

They have a balance of $2000 as savings. Also, their cash outflow is $3000.

So, net cash left after cash outflow = $(3230-3000) = $230.

Since Justin has retirement contributions taken out of his salary at work and they have renter's, car and life insurance coverage, so based on all this information it will be good if they work on managing income.

Thus, the correct option is (a).