Case study playbook
How to solve a personal finance case study
Use this as the team operating manual: convert a family profile into a clean diagnosis, prioritize the biggest risks, and present recommendations that sound like real advice instead of a list of disconnected facts.
The 5-step case-study method
- Extract the facts. Build a one-page fact base: ages, jobs, income, after-tax income, assets, liabilities, monthly payments, insurance, goals, and constraints.
- Calculate the current position. Compute net worth, monthly cash flow, emergency fund coverage, high-interest debt, retirement savings rate, insurance gaps, and tax flags.
- Rank the problems. Separate urgent risks from nice-to-have goals. A 22% credit card balance, missing insurance, or no emergency fund usually outranks extra investing.
- Design recommendations. Give specific actions with dollar amounts, order of operations, and expected result. Avoid vague statements like “save more.”
- Package the story. Present the plan as a calm path: stabilize, protect, grow, then optimize.
Current-situation snapshot
Before recommending anything, show the family that you understand their situation. A strong snapshot includes these metrics:
| Metric | Formula | Why it matters |
|---|---|---|
| Net worth | assets - liabilities | Shows whether the household is building wealth or carrying too much leverage. |
| Monthly surplus/deficit | after-tax income - monthly expenses | Determines whether recommendations are actually affordable. |
| Emergency-fund coverage | cash savings / essential monthly expenses | Measures resilience before investing or accelerating debt payoff. |
| Debt-to-income | monthly debt payments / gross monthly income | Helps judge borrowing stress and housing/car affordability. |
| Retirement savings rate | annual retirement contributions / gross income | Shows whether long-term goals are funded at a realistic pace. |
The four required pillars
Debt management
List each debt by balance, APR, payment, and priority. Use avalanche for high-interest debt, refinance only when it lowers total cost, and never ignore minimum payments.
Savings
Split savings into emergency fund, short-term goals, education, and retirement. Match savings recommendations to time horizon and risk level.
Insurance
Check health, auto, renters/homeowners, disability, and life coverage. Insurance recommendations should protect dependents and income first.
Taxes
Identify tax-advantaged accounts, withholding issues, education credits, retirement contributions, HSA eligibility, and consequences of withdrawals or asset sales.
Common case patterns
| Pattern | Likely issue | Strong recommendation angle |
|---|---|---|
| Young worker with student loans, credit cards, and a car loan | Cash-flow pressure, high APR debt, small emergency fund | Stabilize cash flow, kill credit-card debt, maintain employer match, then build 3-6 months of expenses. |
| Family with modest income and limited credit history | Credit access, rent/housing barriers, thin savings | Build credit safely, automate small savings, use community resources, avoid predatory borrowing. |
| High-income family with large goals | College, retirement, inheritance, student loans | Do not let high income hide underfunded goals; diversify concentrated assets and use tax-aware planning. |
| Mid-career household with kids and aging parent | Retirement timing, college costs, elder-care costs | Prioritize retirement sustainability, realistic college funding, and insurance/estate basics. |
What makes the recommendation credible
- Use numbers from the case and label any assumptions.
- Show the order of operations: what happens this month, this year, and over the next several years.
- Explain tradeoffs. For example, paying credit cards faster may delay a vacation fund, but it improves cash flow and reduces interest.
- Do not recommend products just because they sound sophisticated. The best answer is often simple, specific, and affordable.
- End with measurable next steps: payment amount, savings target, contribution percentage, policy review, or tax action.