Isabella Ryan and Ethan Sloane have plans on getting married, some day. But in the meantime, they want to get their financial house in order before they book a honeymoon.
“Our financial situation is a little unique,” said Isabella and Ethan, whose names have been changed to protect their identity. “Or it is at least to us.”
Indeed it is. Isabella lives with her boyfriend Ethan and her eight-year-old son, Scott, from a previous marriage. Isabella and Ethan are working, but they haven’t saved up enough money to do all the things that they want to do as a couple and as a family.
“We plan on getting married one day, but we have to have money,” she said. At the moment, Ethan is the bread winner in the household and — because the current situation with the economy — Isabella is working only part-time as an administrative assistant.
Besides getting married, Isabella and Ethan have other big plans. They want to buy a house and Ethan wants to start a business in about eight years. But the finish line for those plans seems to move farther away rather than closer. “We have tried and tried to budget our money and it just never seems like we can,” she said. “It seems like we can never get ahead. No matter how hard we try there just never seems to be enough money.”
In requesting a money makeover from the Financial Planning Association® (FPA®), Isabella said she wanted to figure out “where we are going wrong.”
“I am really worried about finances — not just right now, but also for our future,” she said. “But in the mean time, we just can’t ever seem to get out of this rut we are in.”
According to Isabella, it’s not that Ethan and she are big spenders. They never eat out and they don’t buy “unnecessary things.” But she said they do live paycheck-to-paycheck and they want to break that cycle. “At this point, we are in desperate need of some help and some education about our finances.”
Summary of Goals
- Isabella and Ethan would like to buy a house together in the next one to two years. They want to move to the country, or buy raw land and build a home. They are looking in the $150,000-$160,000 price range.
- Ethan and Isabella are hoping to plan a wedding soon. They anticipate support from family, but expect to be on the hook for half of the overall cost. They are looking at an overall cost not to exceed $10,000.
- Ethan would like to own an auto body shop.
- Isabella and Ethan would like to establish a savings account to cover at least two to three months of expenses.
- Isabella and Ethan would like to move beyond the “paycheck to paycheck” lifestyle they currently live within.
- Ethan and Isabella would like to build some lifestyle expenses into their overall cash flow plan. They anticipate needing a new car, and hope to be able to take a vacation every year.
- Isabella knows they need to begin saving for her son Scott’s education. She would like to know the best education savings vehicles to meet these goals.
- Isabella would like to finish her own post-secondary education, with a focus on accounting to put her on a track to a Certified Public Accountant (CPA) designation.
- Isabella has shared that neither she, nor Ethan, have estate planning documents in place. She recognizes a need to put these in place, particularly to ensure Scott’s well-being.
- Ethan and Isabella would like to begin thinking about long-term goals, namely retirement.
- Isabella has unpaid medical bills that total $2,300, and would like some help with a plan to pay them off.
What's a young couple to do? We asked FPA member, Michael A. Branham, CFP®, a principal with Cornerstone Wealth Advisors, Inc., to analyze their finances and create a plan.
