Neil and Nancy are married with two children at home and a mortgage. Neil's net pay per year is $56,000 and Nancy doesn't have any income. Their mortgage payment of $1,500 includes insurance on their home. They have additional monthly expenses of $3,500. Neil contributes 10% of his earnings to a retirement fund and they have $16,000 in savings. There is a $500,000 life insurance policy on Neil but none on Nancy. As their financial advisor, what part of Neil and Nancy's financial plan would you encourage them to work on?

their current cash flow is negative since their expenses are higher than their income:

monthly net income = $56,000 / 12 = $4,667monthly expenses = $1,500 + $3,500 = $5,000monthly cash flow = ($333)

they have 3 options:

Option 1 (which I personally dislike) is that Neil contributes $4,000 less per year to his retirement account in order to balance their net income and expenses. The problem is that once he retires, his income will be much lower. Option 2 is that they lower their expenses a little bit, only enough to balance their cash flows.Option 3 is that Nancy gets a part time job, maybe a couple of hours per day which will allow her to earn money that can be used to cover some expenses.

Personally I believe that option 2 is the best, but if they definitely cannot lower their monthly expenses, then option 3 would probably fit them.

The answer would be 484