Chapter 1 Flashcards
Avoiding financial planning just creates more _________ problems
Financial
Personal financial planning is an __________ process it changes as your financial situation and position in life change
Ongoing
Importance of personal financial planning
- Manage the unplanned
- Accumulate wealth for special expenses
- Save for retirement
- Cover your assests
- Invest intelligently
- Minimize your payments to taxes
The personal financial planning process includes what?
- Evaluating your financial health
- Define your financial goals
- Develop a plan of action
- Implement your plan
- Review your progress, reevaluate, and revise your plan
What is involved in evaluating your financial health?
- Examine your current finanaical situation (how much money you/spend, etc)
- Record your finances & spending
What involved in defining your financial goals?
- Write down your goals
- Attach a financial cost to each one
- When will you need to achieve your goal?
- Analyze & revise your goals
What is involve in developing a plan of action?
- Flexibility
- Liquidity
- Protection
- Minimizing taxes
What is involved in implementing your plan?
- Stick to your plan
- Use your financial plan as ur guide to achieve ur goals
- Keep goals in mind & work towards them
What is involved in review, reevalualte, and revise?
- Review progress
- Reevalaute & revise for changes in your life
- Be prepared to formulate a different plan to meet your goals
How long is a short term goal?
Within 1 year
How long is a intermediate goal
1-10 yrs
How long is long term goal
10+ yrs
What are some ex. short term goals?
Accumulate emergency fund equal to 3 months’ living expenses
What are the stages in an individual’s financial life cycle?
- Stage 1 - Early years - A time of wealth accumulation (before 54)
- Stage 2- The Golden Years- Approaching Retirement (55-64)
- The retirement years (After 65)
What determines your income?
- Skill
- Education
- Martial status
