2022 JAN 13 (NewsRx) -- By a
No assignee for this patent application has been made.
News editors obtained the following quote from the background information supplied by the inventors: “Financial independence is a subject on many people’s minds: whether one is a millennial or a baby boomer, the ability to ensure that one has enough money for one’s lifetime is a significant source of stress for most people. While people have tried to use budgeting took, financial advisors, and self-directed investing, there is no one holistic framework which ties together the key elements of one’s financial health: expenses and income, assets and liabilities, from the perspective of now and future years as a dashboard for future actions. Because of the fragmentation; many individuals tend to operate blindly, without context (e.g. how much money do they need in retirement) with disparate pieces of data (banking and brokerage statements), The services provided to individuals are either on-line with little personalized contact, or personalized by individuals who may be compensated towards selling more expensive products versus those with same performance, but less lucrative. By executing a methodology such as Personal Profitability, an individual is able to understand their current financial situation, as well as identify what actions they may need to take in the future. They will have the context and metrics exist in order to create transparency on how financial actions help or hinder their Personal Profitability.”
As a supplement to the background information on this patent application, NewsRx correspondents also obtained the inventor’s summary information for this patent application: “By providing a methodology, processes, and framework, an individual would be able to able to understand and control their “personal profitability” status in an integrated way. By using the Personal Balance Sheet, the Monthly Cashflow, and the Multi-Year Forecast view, the methodology integrates the important elements of an individual’s financial needs together over time to present how the individual is performing based on their future goals through reporting actuals and forecasting future outcomes. It is connected to and ties together what has previously been fragmented elements of an individual’s financial plan: assets, liabilities, and cash flow.
“The objective and benefits of the system would be to allow the individual to make the necessary adjustments in their spending and investing decisions based on their goals, their income, and their expenses over a multiyear period as events based on their actuals and forecast. The Personal Profitability analyses allow the individual to view and monitor the impacts of earning, spending, and saving on one’s holistic financial health now and in the future by using the Personal Monthly Cash How, Personal Balance sheet, and Multi-Year forecast. Maintaining the integrity of the analyses requires active forecasting based on the concepts of Risks, Opportunities, Provision and Task.”
The claims supplied by the inventors are:
“1. A methodology called the Personal Monthly Cash Flow which consists of a listing of the major categories which make up one’s expenses (fixed and variable), income, and after-tax income, summed up with a net income number total (after-tax income minus total expenses) on a monthly basis.
“2. A methodology according to claim 1, wherein the actual numbers are recorded for past months, and forecast numbers are “penciled in” for future months for each line item, totalling a full year forecast for the major line item categories listed under expenses, income, and after-tax income.
“3. A methodology according to claim 1, wherein fixed expenses are those expense line items which occur every month automatically such as mortgages, rent, utilities, phone bills, car payments, health insurance, and insurance premiums.
“4. A methodology according to claim 1, wherein variable expenses represent those expenses which are in the control of the individual and can usually be tracked by payment method such as cash or credit/debit cards within specific categories such as food, clothing and entertainment in the monthly bank statements.
“5. A methodology according to claim 1, wherein together, the fixed and variable expenses represent an individual’s total expenses by month for the full year (actuals and forecast).
“6. A methodology according to claim 1, wherein the total income is made up of line items such as salary, dividends, and interest income where both actuals and forecasts are recorded by month by line-item category.
“7. A methodology according to claim 1, wherein after-tax income is calculated, by applying a tax rate on the pre-tax income to calculate an after-tax income number, which is included as a separate row as after-tax income depending on the tax treatment of the asset.
“8. A methodology according to claim 1, wherein the net income number is the difference between the total expenses (fixed plus variable) and the after-tax income number, calculated for both actual and forecasted months and maintained for the full year.
“9. A methodology called the Personal Balance sheet records all assets and liabilities, resulting in a net total worth, which is updated every month to show the actual net worth number for the month.
“10. A methodology according to claim 9, wherein under Assets, the categories include line items such as Cash and cash equivalents, Investment accounts, and real estate.
“11. Under Investments, according to claim 10, would include items such as brokerage accounts, 401ks, and IRA accounts.
“12. A methodology according to claim 7, wherein under liabilities, line items would include the current total outstanding value for all loans and debt obligations such as student loans, mortgages, credit card debt, car loans, etc. listed separately.
“13. A methodology according to claim 9, wherein the net worth number is calculated as total assets minus total liabilities and represent the total net worth of the individual on a monthly basis for the full calendar year, actuals and forecast.
“14. A methodology called the Multi-Year Forecast according to claim 1, wherein the analysis represents the same Monthly Cash How line item categories but by on an annual basis, in order to provide a mufti-year view of net income for every year until death.
“15. A methodology according to claim 14, wherein the same line item categories, calculations, and actuals for the Monthly Cash How analysis would tie back to the matching year in the mufti-year forecast.
“16. A methodology according to claim 14, wherein the actual numbers are recorded for past months, and a forecast number is “penciled in” for future months for each line item, totalling a full year forecast for the major line item categories listed under expenses, income, and after-tax income for every year until death.
“17. A methodology according to claim 9, wherein the Personal Balance sheet net worth number ties back to the Mufti-Year forecast in that assets in the Personal Balance Sheet may be available to close any financial gaps in future years through sale/liquidation.
“18. A methodology wherein the Mufti-Year Forecast would include assumptions for known changes in the forecast such as retirement (salary would cease),
“19. A methodology according to claims 1, 9, and 14, wherein the management of Risks, Opportunities, Provision and Tasks represent the 4 categories of possible events which would change the forecasts of the Personal Balance sheet, Monthly Cash How, or Mufti-Year Forecast.
“20. A methodology according to claims 1, 9, and 14, wherein the Risks represent events likely to happen which negatively affect and require adjusting one’s forecast of the Personal Balance Sheet, Monthly Cash How, and Multi Year forecast, which allow the individual to incorporate these risks in his or her forecast.
“21. A methodology according to claims 1, 9, and 14, wherein the Opportunities are events likely to happen which positively affect one’s forecast numbers of the Personal Balance Sheet, Monthly Cash How, and Mufti-Year forecast, and are often related to savings or increases in income such as a bonus or inheritance.
“22. A methodology according to claim 21, wherein Opportunities would be earmarked in the Personal Balance Sheet, Monthly Cash How, and Multi-Year Forecast.
“23. A methodology according to claims 1, 9, 14 wherein the Tasks are when an individual creates an additional goal above and beyond what is documented in the Personal Balance Sheet, Monthly Cash How, and Multi-Year forecast such as a desire to pay for a child’s college tuition.
“24. A methodology, according to claim 23, wherein Task items would be earmarked in the Personal Balance Sheet, Monthly Cash How, and Mufti-Year Forecast.
“25. A methodology according to claims 1, 9, 14, wherein the Provision items represent assets which have not been tagged with a purpose yet but may be used for large expenses such as vacation without disrupting the documented and ongoing plan of the Personal Balance Sheet, Monthly Cash How, and Multie-Year forecast.
“26. A methodology according to claim 25, wherein provision items would be earmarked in the Personal Balance Sheet, Monthly Cash How, and Multi-Year Forecast.
“27. A methodology according to claims 1, 9, 14 wherein once the above framework and analyses are completed with actual and forecast numbers, the individual can plan how to cover current and future net income or net worth gaps through changes in spending, saving, and investing as part of their overall strategy with the ability to monitor the changes in the actuals and forecasted numbers of the three analyses.”
For additional information on this patent application, see: Park, Grace. Personal Profitability. Filed
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