Topic 5: finacial planning Flashcards
1
Q
cash flow analysis
A
- monthly budget
- inflows/outflows
- net balance
2
Q
financial planning is required to finance what?
A
- life events: uni, cars, houses, cruises, weddings etc
- retirement
- death
3
Q
events people plan for depend on what?
A
- family situation
- financial situation
- current lifestyle
- personality
- attitude to risk
- anticipation of future events
4
Q
effective financial planning features
A
- realistic
- clear (accurate)
- timely
- flexible
- documented
5
Q
monthly budget
A
- financial plan
- drawn up every month
- shows expected income, expenditure + end balance
6
Q
cash flow forecast
A
- results of monthly budgets accumulating to give medium/long term plan
7
Q
making a plan
A
- decide desirable aspirations
- establish realistic timescale
- establish starting position
- establish priorities
- document plan
- implement plan
- review progress
8
Q
establishing a starting position (current resources audit)
A
- current/savings balances
- current income/expenditure
- current assets
- liabilities owed
- net worth (total assets-liabilities)
- provisions for unforeseen/planned events
9
Q
establishing priorities
A
- narrow list of goals
- opportunity cost
10
Q
documenting the plan
A
- starting financial position
- goals set
- timescales
- priority order
- risks
- where there’s flexibility
- actions to be made
- ongoing plan reviews
11
Q
financial products to meet financial goals
A
- saving
- borrowing
- insurance
12
Q
flexibility
A
- desirable feature of a good budget
13
Q
consequences of failed budgets
A
- less likely to achieve wants/aspirations
- bad financial footprint/credit score
- may have to work longer
- may have to rely on state pension later
