Ge1202 Final

Chapter 1 understanding fin planning process

Reward of financial planning Financial Action(decision)

-↑Standard of Living, Spending Money Wisely, Accumulating Wealth -Basic asset, Credit, Insurance, Investment, Retire &Estate

The Personal Financial Planning Process

-Systematic process that considers important elements of an individual’s financial affairs in order to fulfill financial goals

Steps: 1. Define financial goals 2. Develop financial plans and strategies to achieve goals 3. Implement financial plans and strategies 4. Periodically develop and implement budgets to monitor and control progress against goals 5. Use financial statements to evaluate results of plans and budgets, taking corrective action as required 6. Redefine goals and revise plans and strategies as personal circumstances change.

Long/ intermediate/ short term goals: Long: >6 years ; Intermediate: 2-5 years; Short: next year

Different Plans to Achieve Your Financial Goals (Planning)

Asset Acquisition, Liability and Insurance, Savings and Investment, Employee Benefits, Tax, Retirement and Estate

Special Planning Concern: Managing two incomes, Managing Employment benefit, Managing Finances in Tough Economic Times, Adapting to Other Major Life Changes

Professional Financial Planners: 1. Commission-based planners: earn commission on selling financial products; 2. Fee-only planners: charge fees based on complexity of prepared plans; 3.Hybrid approach: involves both charging fees and collecting commissions

The Planning Environment: Government, Business, Consumers

Government: Regulating the level of economic activity; Taxation and regulation constrain planning ; Monetary & Fiscal Policy

Economic Cycles: Stages related to employment and production levels; Growth measured by changes in GDP; (E,P,C,T)

Inflation: Measured by changes in CPI; Affects purchasing power and interest rates & financial plans and goals

Chapter 2 USING FINANCIAL STATEMENTS AND...