Will be a serious attempt at your expectationsfor your life and finances, incorporating yourlifestyle, major planned activities, key events,thoughts on personal/professional/economicprogress, etc.
Deliverable:
Thinking about your immediate future, compile a comprehensive and detailed (written and calculated) 3.5-year financial plan. Your submission will include a 3.5 year forecast of your expected cash flows, with detailed sections on various aspects of income, savings, spending, and financial goals. You will make assumptions about where you are going to live, the lifestyle you plan to lead, and major decisions you expect to make during this time, as well as plans you may be making for the future (including financial implications).
Completed final submission will have:
1. Cover page with name, section , date
2. Section write up (6-10 pages, Times Roman 12 font, single space, 1” margins)
3. Appendix for key assumptions/metrics, financial schedules, cash flow forecast, quotes, other supporting details, etc
Check point assignment #1: March 10th
Check point assignment #2: March 31st
Section I – Summary
Basic outline of what you think your life is going to look like over the 3.5 years post-graduation.
This will include where you plan (or would like) to live, what job(s) you’ll have, your income (all sources), the lifestyle you plan to lead (and the expenses that go with it).
This should also include a brief discussion of both short-term and long-term goals, including personal and financial.
Section II – Goals
List and describe in detail your top 5 “financial” goals, and detail how you will plan to accomplish them. You should incorporate your thoughts on interest rates, expected investment returns, your threshold for risk, and other variables that will influence the decisions you’ll make and the results you expect to get. Must describe these through S.M.A.R.T. to account for planned details.
Section III – Budget & Forecasting
Outline in detail your monthly cash flows for the first 1.5 years after graduation (July 1 till Dec 31 of the following year), and then annually for the following 2 years (3.5 years total). Start with gross income and all revenue sources, and account for all deductions including the various taxes, deductions (healthcare, insurance, etc), and payroll related expenses. You will also include your living
expenses such as housing, food, entertainment, savings, etc (FYI: Net Income = Expenses + Savings). For anything that you may finance/borrow (house, car, vacation, etc), you must include an outline of the financing arrangement, inclusive of interest rates and terms. You will need to reference outside sources for much of this, including calling realtors, banks, researching classified ads, etc.
This is a written, outlining key assumptions and metrics, as well as economic/investment assumptions (e.g. inflation) that will impact your forecast.
Section IV – Risks & Concerns
Your prior sections are likely to be based off your “expectations” and best guess at what the near future may look like for you. I want you to list and describe the realistic things that could disrupt your plans, and additionally, how you are going to plan to mitigate the impact of these things in your budgeting & planning.
Appendix
Spreadsheet print out of your cash flow forecast; key screenshots / tables / charts of quotes, (planned) financial transactions (i.e. car/home purchase), savings/investment growth expectations, etc. Some in-class/homework assignments may/can feed into this.
Deliverable:
Thinking about your immediate future, compile a comprehensive and detailed (written and calculated) 3.5-year financial plan. Your submission will include a 3.5 year forecast of your expected cash flows, with detailed sections on various aspects of income, savings, spending, and financial goals. You will make assumptions about where you are going to live, the lifestyle you plan to lead, and major decisions you expect to make during this time, as well as plans you may be making for the future (including financial implications).
Completed final submission will have:
1.Cover page with name, section , date
2. Section write up (6-10 pages, Times Roman 12 font, single space, 1” margins)
3. Appendix for key assumptions/metrics, financial schedules, cash flow forecast, quotes, other supporting details, etc
Section I – Summary
Basic outline of what you think your life is going to look like over the 3.5 years post-graduation.
This will include where you plan (or would like) to live, what job(s) you’ll have, your income (all sources), the lifestyle you plan to lead (and the expenses that go with it).
This should also include a brief discussion of both short-term and long-term goals, including personal and financial.
Section II – Goals
List and describe in detail your top 5 “financial” goals, and detail how you will plan to accomplish
them. You should incorporate your
thoughts on interest rates, expected investment returns, your threshold for risk, and other
variables that will influence the decisions
you’ll make and the results you expect to get. Must describe these through S.M.A.R.T. to
account for planned details.
Section III – Budget & Forecasting
Outline in detail your
monthly
cash flows for the first 1.5 years after graduation (July 1 till Dec 31 of the following year), and
then
annually for the following 2 years (3.5 years total). Start with gross income and all revenue
sources, and account for all deductions
including the various taxes, deductions (healthcare, insurance, etc), and payroll related
expenses. You will also include your living
expenses such as housing, food, entertainment, savings, etc (FYI: Net Income = Expenses +
Savings). For anything that you may
finance/borrow (house, car, vacation, etc), you must include an outline of the financing
arrangement, inclusive of interest rates and
terms. You will need to reference outside sources for much of this, including calling realtors,
banks, researching classified ads, etc.
This is a written, outlining key assumptions and metrics, as well as economic/investment
assumptions (e.g. inflation) that will impact
your forecast.
Section IV – Risks & Concerns
Your prior sections are likely to be based off your “expectations” and best guess at what the
near future may look like for you. I want
you to list and describe the realistic things that could disrupt your plans, and additionally, how
you are going to plan to mitigate the
impact of these things in your budgeting & planning.
Appendix
Spreadsheet print out of your cash flow forecast; key screenshots / tables / charts of quotes,
(planned) financial transactions (i.e.
car/home purchase), savings/investment growth expectations, etc. Some in-class/homework
assignments may/can feed into this.
Final Project: Personal
Financial Plan
Executive Summary
As I have accepted a job, my short-term path seems relatively clear. My 5-year plan: work for 3
years at The Boston Consulting Group in Dallas and then attend a top 10 business school.
After graduation, I intend to take two summer trips: one driving around the United States and the
other “backpacking” in Europe. These trips are likely to create a short-term increase in my
expenses in a time period that I will not be earning income.
I start work as an Associate in mid-September. On September 1, I intend to move into a twobedroom apartment in the Uptown area of Dallas. I have a roommate who will be working for JP
Morgan in the Dallas area. We have agreed upon a style of apartment (safe, nice area,
independent bedrooms, etc.) but not the exact apartment complex. Most Dallas apartment
complexes will only allow you to lease about 3 months out. To furnish the apartment, we will
use a mixture of currently owned items but also need to purchase several pieces. Additionally,
we will split the payment for utilities, cable, internet, and homeowner’s insurance.
My job at BCG is quite lucrative. I will make both attractive short-term cash compensation as
well as earn longer-term retirement funds. I can expect my compensation to increase at about 3%
per year for my first 2 to 2.5 years and then increase when I am (hopefully) promoted to
Consultant. Working at BCG will likely impact my expenditures. First, I will likely travel a
significant amount. That will mean many meals and incidentals will be covered (as well as
spending less on utilities, food, etc. at my apartment). Secondly, I will also go to a significant
number of recruiting and affiliation events when in Dallas which will save some money.
However, as I will be around many new friends with ample means, when we do “go out” I will
likely be spending more than I did in college. Additionally, I understand that the Associates plan
two weekend trips each year that are quite luxurious. All of this will make saving more difficult.
After 3 years at BCG, I plan to attend the best business school at which I can gain admission. I
expect business school to be expensive, and I do not expect to earn a scholarship. My parents
have agreed to pay the base tuition cost but expect me to fund the remainder. With my current
savings (and what I will add while working at BCG), I expect to be able to cover this outflow
without taking on additional debt.
Finally, after I graduate from business school, I assume that I will return to consulting. As this
will be more than 5 years from now, this plan is much murkier. Regardless, I should be able to
find a good job with attractive compensation. I am going to assume I return to Dallas (for lack of
a better assumption).
My “financial” goals over the next 5 years are straightforward:
• Be successful at BCG as I seek to maximize my compensation (and learning)
• Maintain an upscale lifestyle in uptown Dallas (including nice apartment, travel, etc.)
• More actively manage my current (and future) savings to create a larger “nest egg” to
prepare for business school as well as for later life needs such as buying a house, etc.
Longer term, I have two additional goals:
• Own a nice house that comfortably fits my family. Likely to cost $1M
• Pay for my children’s undergraduate education
Financial Goals
I stated 5 goals above. I will take closer look about how I can achieve these goals:
• Be successful at BCG as I seek to maximize my compensation (and learning). Creating a
foundation for my business career is very important. Learning everything that I possibly
can at BCG over the next 3 years will open up my mind and establish great skills and
credentials that I can use throughout my career. Therefore, I plan to devote a great
amount time and energy to my job. This devotion will likely mean that I have many
fewer free nights but also means that I will host events and seek to be a very active part
of the BCG community. Doing well also means that over time I will increase my
compensation. BCG touts a 10x increase in compensation over 10 years. While I can not
plan on that, I do think that earning more will help me save to accomplish my short- and
long-term financial goals.
• Maintain an upscale lifestyle in uptown Dallas (including nice apartment, travel, etc.).
As I expect to be working long hours, I want to be able to enjoy myself when I have some
discretionary time. Living in a nice apartment is important so that I can host friends and
family but also so that if I have to work on Zoom for 15 hours per day that I am at least in
a comfortable setting. I also want to be able to travel as my UNC friends (and my family)
are scattered across the country. Maintaining close ties is very important to my psyche.
Finally, I realize that I could save money living with my parents, but I want to establish
my independence in Dallas much the way I did when I moved 1,200 miles away for
college. Boundaries are good. I will earn enough from working at BCG to make this
lifestyle affordable.
• More actively manage my current (and future) savings to create a larger “nest egg” to
prepare for business school as well as for later life needs such as buying a house, etc. I
am fortunate to already have savings from gifts, past jobs, etc. I have passively invested
these funds in savings or money market accounts. Now that I know more about business,
I am going to take 75% of these funds and invest in two ways: the market and in storage
facilities. First, I will invest in mutual funds and in some individual stocks. As the
markets have gone up historically at 10%+ clip, I can earn lucrative returns over time.
My father has advised me to diversify into something other than purely investing in the
market so I also plan to invest in offsite storage facilities as my father’s friend does this
for a living. The IRRs over time have been ~24% (see Exhibit 6), and the investments
typically start creating an income stream about 24 months into the investment which
hopefully can help fund some business school costs.
• Own a nice house that comfortably fits my family. Likely to cost $1M. At some point after
business school, I plan on home ownership. As I very much want to have a family, I have
a traditional set of values that makes a comfortable home as part of the American dream.
To own a home, I will need to maintain a good job, and save enough money to make a
down payment. I also need to make sure my credit score remains high; it is currently
about 780. As for cost, if I live in the University Park neighborhood in which I grew up,
houses are quite expensive…and becoming more expensive as Northeasterners and
Californians flock to my area. I will need to save at least $200K before I can buy a house.
My rough estimates indicate that in about two years after business school, I can afford
such a purchase.
• Pay for my children’s undergraduate education. An education is key for future success.
My grandparents and parents emphasize this view constantly. I plan to start a 529
Savings Fund as soon as I have kids (which will not be before 2028), and to save so that
they can have a great undergraduate experience…both learning and having fun. Much
like home ownership, college savings requires a steady income so that you can save as
well as make keen investment decisions. Depositing $5K per year for the first 12 years
after birth (for each child, and I plan on having 2) should result in an ample amount to
cover basic undergraduate tuition costs (more than $125K per child assuming a 6%
return).
Budget & Forecasting
As detailed, I will have a very stable job at least for the first 24 months. BCG had a very
impressive year during the pandemic (up 8% and record profitability) and has started with 15%+
growth in 2021. That means that my services will be in high demand. On the spending side of the
ledger, I completed a detailed review of my future expenses. (See Key Assumptions for Financial
Modelling and Exhibit 7: Financial Model in Excel in Appendix.)
Key takeaways from this exercise:
• My income will grow impressively if I get perform well and get promoted at BCG. My
financial stability is very tied to a Consultant promotion before I go back to business
school
• I should be able to save a significant amount of money if I stay on budget. Even with
some saving assumptions, I end up with 5.5-year positive cash flow (in addition to 401K
and my $5,000 per year savings). Having a good job is essential to making this happen
• Even though I will live in Texas with no state tax, the government takes a large chunk of
my income (31%). This situation will become more acute over time. I am much more
attune to net revenue now
• Living a moderately high-end lifestyle is quite expensive
o A nice apartment including parking, utilities, furnishings, etc. represents almost
40% of my total expenditures. I could live at home (4 miles away) and save
$17,000 per year!
o Going out to dinner and for entertainment represents almost another 20% of my
expenses
o So, 60% of my expenses are drive by pure lifestyle choices. Somewhat puts a cost
on how I choose to live
• Costs tend to be very lumpy compared to income. Moving between cities and the set-up
phases on a new job and apartment drains cash flow quickly
• Summer trips will both be more expensive than I expected and come at a time when I
have no real income. While I can use credit cards and savings, I will likely be more
careful about how I budget those excursions. Also, my parents have talked about going to
Europe for $35/day in the 19080s. That level of expenditure is not even remotely possible
today
• BCG covering a portion of my expenses because I am working out-of-town saves me
about 10% of my total spend although that could vary up or down if I happen to be on an
in-town case…or if COVID-era learnings cause much more work to be done from my
apartment
• Going back to business school will be expensive. Even with my parents paying tuition
AND assuming I get a well-paying summer job, I will be ~$30,000 negative cash flow
•
•
•
•
•
•
over that two-year period. While I have savings to use against this shortfall, committing
those savings will reduce my nest egg over time
Cars are expensive especially when you consider parking, gas, taxes, insurance, and
expected maintenance and repairs on a car that is aging. Edmunds opened my eyes.
Today, as my parents pay the insurance and taxes, I did not fully realize the cost (or their
generosity)
In 2022 and 2023, I enjoy a surplus of more than $60,000. I feel good about investing this
money, and am going to devote real time to understanding the investment process and
how to judge short and long-term tradeoffs
As my Finance professor pointed out, compounding interest or returns are key to growing
financial wealth. When reviewing what would be required for funding a 529 account for
my children, I realized that $5,000 invested each year for 12 years from a child’s birth
could likely pay for the base tuition for undergraduate college. Planning really does
matter!
I am fortunate that I am not having to finance a car or other essentials, nor do I have
credit card debt. Consumer interest is not deductible and would eat into my savings
Living in Dallas is relatively cheap. Dallas’ cost of living is more than 15% lower than
Chicago (according to various websites including salary.com). Interestingly, BCG does
not adjust salaries based on where you live so Dallas is the best city in the United States
to live in if working for BCG (from a cost of living perspective)
Finally, this exercise points out three realities:
o Being precise in personal financial modelling 3 or 4 years out is quite difficult;
shoot for accuracy
o A lot of the insight is in the details: how much does a car cost to maintain? how
much do we really spend going out 2 or 3 nights per week? does a new couch
really cost $900?
o As a student that grew up in a fortunate way, I have realized how my parents have
supported me: paying my car insurance, helping fund and decorate my apartment,
supplying me with spending money, etc.
Risks & Concerns
I see 5 major risks to my plan:
• First, for some reason, my job at BCG does not work out. BCG will put me on a great
path for learning, development, and income growth. If for some reason, I don’t like the
work, or BCG does not appreciate my efforts, I will need to rethink my career plan. My
best path would be to get a job in marketing in a field in which I am passionate. That
could be sports. I worked for the Houston Astros Baseball Club one summer. Doing
something that brings out a different set of passions could be fun and rewarding BUT
would definitely change my financial model assumptions.
• Second risk would be not getting into a top-10 business school. Working at BCG will
help my odds, but nothing is assured. If I do not gain admittance, I would need to decide
whether to go to work for a client, move into a job as mentioned above, or potentially
take an internal role at BCG. I think I need to keep my mind open to all these
possibilities. Also, getting into a top business school can be a process. I need to attack it.
I am currently studying for the GMAT which I will take in late April. My grades are quite
•
•
•
good. Now, I just need to make a positive reference at BCG. And if I do not get in the
first time I apply, I can always try a second time.
Third, BCG work could possibly move fully onto Zoom: no travel for Associates. If
so, I would see an increase in my expected expense levels…and likely would have a bit
less zest for the job. While the loss of covered expenses would be annoying, the bigger
issue would be the lost learning from not being in a team room. I experienced that
situation this summer and am hoping the ways of working go back to something more
like pre-pandemic. If this is the case, I will likely try to adapt as I think 3 years at BCG
will provide a good basis for future career moves.
Fourth, what if I don’t like my roommate? Or she does not like me! We know each
other but not that well. Having a one-bedroom apartment would increase my living
expenses by almost 2x. Back up plan: catch up with some friends from high school, get to
know other BCGers, and meet some co-tenants so I can create some other roommate
options after year one of our lease
Finally, while I grew up in Dallas (since age 3), I might find that I do not enjoy living in
Dallas post college; I miss my UNC friends or being on the East Coast. If so, I could seek
a transfer to another BCG office such as Atlanta or Washington, DC. I did ask during the
recruiting process how this could work, and while it is not common, transferring seems
doable if I have one year in good standing.
APPENDIX
Key Assumptions for Financial Modelling (See Exhibit 7)
Compensation
• Earn half month of compensation in Sept 2021; compensation based on BCG offer letter
(Exhibit 3)
• Annual salary increases of 3% in January each year (consistent with past BCG practices)
• Promotion to Consultant in DEC 2023; assumed compensation: $120,000
• Bonus each year at 15% of salary
• Work 50% of year in 2024 when I leave to go to business school (assumed to stop
working in Jun 2024 and start business school in Sept 2024)
• Investment income: $205,000 in current savings that will earn 2% return on average (a
simplifying assumption but if I invest in storage facilities, I will not see any cash return
for at least 2 years)
• Summer 2025: summer employment with $35,000 salary and no bonus
• Start work in Sept 2026 at $130,000; bonus at 20% (BCG best estimate of salary at that
time)
Taxes
• Federal income tax rate: based on current schedules for 2021 filing as a single person
• No state or city income tax (in Dallas, TX)
Savings: Retirement
• 401K contribution: $6,000/year (through 2024; not funding while in business school)
Deductions
• 7.65% in FICA for social security and Medicare; only paid on adjusted gross income (not
including investment income); FICA rate assumed to stay constant (despite rumors to the
contrary)
Expenses: pre-business school
• Rent increases each year by 3% (when signing a new lease in September)
• Plan to move home for 2 months between leaving job and going to business school (Jul
2024, Aug 2024)
• Apartment and utility costs based on average of three possible living locations in Dallas
(See Exhibit 1 and Exhibit 2)
• Food/groceries includes take-out food, beverages, snacks, groceries, and consumables
used in the house. Estimated at $125/month. Costs are lower than in Chapel Hill because
I will be travelling for work at least 50% of the time
• Cost of car ownership based on Edmunds.com estimates (See Exhibit 4). Currently, I own
the car without debt so no financing costs are required
• Gas: 4,000 miles driven per year at 20 miles/gallon at $2.40 per gallon. Will use Uber
regularly. Also, will be gone at least 50% of the time
• Uber: use 2 Ubers per week at $8/trip
• Renters insurance: assume I pay half (roommate pays half), $1,000 deductible. Expense:
$17/month
• Eating out per week: 3 dinners at $30 each, 2 lunches at $15 each and 1 breakfast at $15
each
• Entertainment: 4 nights out at $30 each (Ubers included elsewhere)
• Work clothes: buy $1,500 in clothing twice per year. Will likely be lumpy but a bit
unpredictable after the initial buy
• Travel: 6 trips per year to visit friends and family. As BCG will often fund my plane fare
(as I will be working in alternative location), I will assume 8 plane tickets. I will stay
with friends. Average flight cost: $150. Assume 2 trips in December for holidays, and
otherwise spaced out during the year
• European summer trip: Father will give me frequent flyer miles so no cost of plane flight.
Assume $90 per day per The Savvy Backpacker. Length of trip: 20 days
• US summer driving trip: 3-week driving trip. $70/day based on student style trip in
Nomadic Matt website and other travel site research. As I will stay with friends and
family for most of the nights, the average cost will be less for me that for travelers relying
on hotels
• Vacations: will go on a father-funded family vacation to beach each year. No additional
costs included
• Furnishings for apartment: one-time costs around move-in (Sept 2021)
o Television: $400
o Kitchen supplies: $400
o Window treatments: $500
o Coffee table: $300
o Couch: $900
o 2 rugs: $200
•
•
o Miscellaneous: $1,000
o Total: $3,700…I assume that I will pay half and my roommate will pay half…so a
one-time cost of $1,850 in September 2021
Donations: plan to donate $500 to my two favorite charities each year (when working)
o Make-A-Wish
o North Texas Food Bank
Miscellaneous: includes birthday presents, unanticipated repairs, and other unexpected
funding needs: $100/month
Expenses: during business school
• Used US News, GMAT Club and other sources to estimate costs of attending business
school including room and board (See Exhibit 5); I plan to live in student, on-site housing
during both years of business school
• Moving expenses: $1,000
• Car assumed to be garaged at my parent’s home in Texas. Will not take it to business
school. Will incur basic maintenance but no gas expense
• Living expenses (including food, eating out, etc.) assumed to be 20% more than in
Dallas. I am not sure where I will be but hopefully in the Northeast, Chicago, etc. Likely
a higher cost of living area than Dallas
• My parents agreed to pay my base tuition for business school
Expenses: post business school
• Move back to Dallas in Jun 2026
• Rent starting in Jun 2026 that is 10% more than when I left apartment living in Jun 2024
o But start work in Sep 2026
• Other living expenses consistent with Jun 2024
• New furniture and fixtures: $3,000
• One-time move-in costs: $1,000
• Replenish work clothes when start working again
Savings: planned
• Goal to save $5,000 per year when not attending school (so only applies to 2022 and
2023); assume save $2,500 in 2024 when starting business school
Exhibits
Exhibit 1 – Potential Uptown Dallas Apartments (3 options)
1. The Taylor
2 bedrooms, 2 bathrooms apartment in uptown Dallas
2. Glass House
2 bedrooms, 2 bathrooms apartment in uptown Dallas
3. Gables Villa Rosa
2 bedrooms, 2 bathrooms apartment in uptown Dallas
Exhibit 2 – Cost of Renting an Uptown Dallas Apartment (Averages)
Exhibit 3 – Boston Consulting Group Offer Terms
Exhibit 4 – Cost of Owning My 2015 Mercedes Benz GLK 350
Exhibit 5 – Cost of Earning MBA
Exhibit 6 – Storage Investments
Exhibit 7 – Financial Plan in Excel (Years 2021 to 2026)

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