Topic 5: Financial Planning

Question 1

What are the purposes of financial planning

Answer 1

Life events - car, house, children
Retirement- Pension is sufficient
Death - Inheritance tax and possessions are catered for

Question 2

What can planning be dependent on

Answer 2

Family, finance, lifestyle, personality and attitude to risk

Question 3

Give examples of positive and negative unexpected financial events

Answer 3

P - Winning the lottery, promotion

N - Illness, redundancy, stolen property

Question 4

What 5 things must a financial plan be?

Answer 4

Timely
Flexible
Documented
Realistic
Clear

Question 5

What’s a budget

Answer 5

Personal financial plan drawn up each month. Income and expenses

Question 6

Whats a cash flow forecast

Answer 6

A budget for the whole year

Question 7

Where do you start when planning a budget or forecast?

Answer 7

Balance of accounts, income, assets - liability, insurance, expenditure

Question 8

What’s a financial health check?

Answer 8

HSBC use this to create a picture of a person’s current financial position - their credit rating

Question 9

What are the consequences of failing to plan

Answer 9

Unlikely to achieve wants and needs
Low credit rating
May come into debt
No pension later in life