Financial Management Challenge Case Study

Paper Type:  Case study
Pages:  6
Wordcount:  1506 Words
Date:  2022-12-20


This case provides an excellent exposition of a financial management challenge that is faced by a soon-to-be-graduate student, Kate Denny. One of the significant problems that affect many college students according to the case is financial management especially after securing the employment in their fields of study. Kate is therefore concerned because she is afraid that she may not be able to live within her means, support herself, and also, fulfill her obligations. Just like any other young professional, Kate desires to become financially independent but also supportive. A close look at the starting salary of $40,000 a year offered to Kate reveals that this amount is significantly higher than she anticipated. With proper budgeting and slight education about appropriate techniques of financial management, Kate is likely to live within her dreams, and support herself fully as a young professional.

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The issue at hand to be addressed in this case is, therefore, to provide Kate with advice and counseling that will ultimately help her manage her finances. Thus, the creation of a proper budget will help solve the problem of mismanagement of funds. This is based on the fact that budgeting is essential for everyone regardless of the situation, and it is even more critical when it is single or has not yet started a family (Dlabay, Kapoor, & Hughes, 2016). Every dollar that is made must be accounted for, and Kate, therefore, requires a clear understanding of the destination of her money and how she can allocate money to fund her financial goals. A primary idea behind this problem is living below one's means each month and therefore means either reducing or eliminating the non-essential spending within the budget.

Causes and Antecedents

As discussed above, the issue to be solved in this case is to help Kate find appropriate strategies to solve the potential problem of financial mismanagement that is likely to take place upon starting to work. However, the cause of this problem is the fear of her inability to effectively manage her finances and live within her means, support herself and fulfill her obligations just like any other young professional. Kate recognizes that as a soon-to-get-job student, she is likely to face financial management challenges because it is a common problem that young professionals often face.

As part of her budget, Kate believes that with a proper budgetary plan, she will be able to meet her financial obligations which include dream vacation, acquisition of new wheels, college loans, high fashion, the basics which include renting an apartment and some necessities, social enjoyment and parties among others. Regarding her situation, Kate believes that she can as well be at a position to manage her finances just like some of her college friend that graduated in the previous years and were in the same situation. Provided by a list of some of the commonly attended things every month by her friends, she requires financial counseling and guidance to effectively come up with a working budget, become financially independent and self-supportive.

Missing Information

Although Kate is concerned about her financial management and the need to have a proper budgetary plan, crucial information about her long-term goals, perhaps after five years or ten. Fundamentally, the primary purpose of budgeting is to assist an individual reach their financial goals such as saving for the down payment on a home or pumping the funds away for the comfortable retirement (Gitman, Juchau & Flanagan, 2015). Having a measurable goal is critical in helping an individual determine precisely how much fat one needs to cut out of the budget. Take must, therefore, take time over the short and long-term goals she wants to achieve and record them in her budget worksheet. She should then monitor her progress towards these goals regularly.

Other than the missing goal, another crucial information about the number of dependents that Kate has lacks in the data provided. Dependents for an integral component of the life of many people. They could be close relatives such as parents and siblings. For proper budgeting plan, it is essential to consider the issue and to balance whatever expenses are necessary against those that are not as well as those that can be postponed (Luu et al. 2017).

Warranted Actions

According to Gitman, Juchau & Flanagan, (2015), the personal budget is undeniably a financial plan that shows an individual family income. Regarding the issues surrounding Kate's desire to have a workable financial plan, the personal budget is the best way, and which will help her take control of her money goes in and out of her household. It is crucial to note that the idea behind managing one's expenses is to know about her expenses and therefore she can be able to spend less than her income. An excellent monthly salary or a weekly personal budget will undeniably help her consciously achieve her financial goals. To create a good personal budget, Kate should merely adopt the following three actions:

Kate should assess her personal and financial situation to help her set her personal and financial goals. The first and critical point of personal budget preparation is self-assessment. It is evident that Kate earns an annual salary of $40000. While this money may seem enough, it may not. Kate must, therefore, assess her earning a level, spending habits, and net financial worth. Ideally, this kind of assessment must also integrate the understanding of her personal needs and value.

Additionally, other factors such as the health, family dependent, the commitments and the overall economic conditions at that time. According to Luu et al. (2017), assessing the current economic conditions is essential based on the fact that it is impossible to set a smart goal if one is not aware of the prevailing values and situations. All these actions will allow Kate to set her personal and financial objectives. It is important to note that this stage will help Kate differentiate between what she wants from the needs. Moreover, this process will be valuable to enable her to prioritize her goals. From the case, it is evident that Kate has some short terms goals such as the Dream vacation, high fashions, the basics and after hours. This kind of goals would not require savings a huge amount of money. However, the long-term objectives such as buying a new car will need Kate to begin her saving initiatives in the current year (Gitman, Juchau & Flanagan, 2015). The short term goals for her case include paying rents while the long-term goals for her include offsetting her college loan. Therefore, taking these actions will provide her with tremendous insights on how to balance the financial demand for short-term and long-term.

Kate should set her income sources to give her an opportunity to estimate her expenses. To build a monthly budget, Kate needs to determine how much income she earns in a month. The income, in this case, could originate from the salary or businesses. However, as a soon-to-be-a graduate, Kate depends on the job offer within her field and therefore constitutes to her primary income source. Because she is a salary earner, Kate should use the net salary credited to her bank account and not the gross salary because the latter is inaccurate. This will, therefore, allow her to estimate her expenses. As such, therefore, Kate is likely to prepare a real expense budget, which should take into consideration the personal situation and goals identified in the first action. The fixed budget will consist of the elements such as the expenses and the incomes that are contractual. These include the house, loan repayment, the salaries, and the utility bills among others. Because the variable needs are contractual but essential, they may consist of basics, transport, vacation, donation, and entertainment for Kate.

Finally, Kate must balance the budget, adjust, monitor actual income expenses and compare her budget against the expenses. Balancing is an act of summing all the income and expenses. In the case whereby there is an excess budget or deficit, she will have to check the variables that are not urgent or which can be postponed. This budget must, therefore, be realistic and not idealistic (Gitman, Juchau & Flanagan, 2015). Looking at the spending every month and comparing it to her budget will help her arrive at the right financial decision-making. The process of monitoring will only work best for her bin case; she keeps a record of her expenses and income. Kate must, therefore, record all her income and expenses the moment she incurs them. It is a continuous stage that must need to be implemented in his budget by avoiding non-critical unplanned spending.


Dlabay, L., Kapoor, J., & Hughes, R. J. (2016). Personal Finance. McGraw-Hill Professional Publishing.

Gitman, L. J., Juchau, R., & Flanagan, J. (2015). Principles of managerial finance. Pearson Higher Education AU.

Larkin, J., & Ragan, J. (2016). The Young Professional: A Personal Budgeting Challenge. Journal of Business Case Studies-Fourth Quarter 2016 Volume 12, Issue 4.

Luu, L., Lowe, J., Butler, J., & Byrne, T. (2017). Essential personal finance: a practical guide for students. Taylor & Francis.

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Financial Management Challenge Case Study. (2022, Dec 20). Retrieved from

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