PERSONAL FINANCIAL PLANNING

OBJECTIVE To know the importance of Personal Financial Planning.

OVERVIEW ☺Advantage of Personal Financial Planning ☺Adult Life Cycle Financial Plan ☺Steps in Financial Planning Process ☺Components of Personal Financial Planning

PERSONAL FINANCIAL PLANNING IS THE ART AND SCIENCE OF PUTTING YOUR MONEY TO WORK FOR YOU AND LIVING WITHIN YOUR MEANS.

IT IS THE PROCESS OF DECIDING HOW TO OBTAIN, PROTECT AND USE THESE RESOURCES.

THROUGHOUT LIFE, EACH INDIVIDUAL AND FAMILY HAS NEEDS THAT CAN BE SATISFIED BY THE INTELLIGENT USE OF FINANCIAL RESOURCES.

ADVANTAGES OF PERSONAL FINANCIAL PLANNING

1. ENHANCES THE QUALITY OF YOUR LIFE.

2. HELPS FOSTER A SENSE OF WELL - BEING AND SATISFACTION.

3. INCREASES CONTROL OF FINANCIAL AFFAIRS. P

4. IMPROVES FAMILY RELATIONSHIPS.

INSTILL SENSE OF FREEDOM FROM FINANCIAL WORRIES. S P

6. INCREASED EFFECTIVENESS IN OBTAINING, USING, AND PROTECTING RESOURCES THROUGHOUT THE ADULT LIFE CYCLE.

ADULT LIFE CYCLE FINANCIAL PLAN

The adult life cycle is the stage that an individual goes through based on age, financial needs and family situation.

AGE 18 – 24 Train for career. Establish household and attain financial independence. Develop a saving and investment plan. Purchase insurance. Create effective financial record keeping and planning system. Make will.

AGE 25 – 34 Provide for expanding housing needs and living costs. Expand career goals. Manage increased needs for credits. Purchase additional insurance coverage.

AGE 35 – 44 Upgrade career training. Maximize protection for major income earners. Establish and work towards retirement goals. Provide greater income for expanding needs.

AGE 45 – 54 Maximize investment Evaluate and update retirement plan Analyze and adjust investment plan as needed Evaluate future financial needs of parents or other dependents

AGE 55 – 64 Consolidate financial assets. Plan for part time or volunteer work during retirement. Investigate housing location and expenses for retirement.

AGE 65 AND OVER Adjust living conditions and spending based on health and income. Obtain assistance with managing financial affairs. Finalize estate plan.

STEPS IN FINANCIAL PLANNING PROCESS

Analyze your current personal and family situation. ? ?

2. DEVELOP FINANCIAL GOAL. - Determine where would you like to be?

CREATE A FINANCIAL PLAN FOR ACTION DEVELOP A PLAN FOR ACTION OF ACHIEVING YOUR GOALS.

B A N K YOU WILL NEED A SPECIFIC PLAN TO FOLLOW. FOR EXAMPLE , INCREASES IN SAVING MAY BE ACHIEVED BY REDUCING SPENDING OR BY INCREASING INCOME THROUGH EXTRA TIME IN THE JOB. B A N K OVERTIME

4. IMPLEMENT THE FINANCIAL PLAN ALL YOUR EFFORTS SHOULD BE GEARED TO AVOID THE MANY FINANCIAL MISTAKES THAT ARE MADE BY INDIVIDUALS AND FAMILIES.

FINANCIAL MISTAKES ! ! !

FINANCIAL MISTAKES NOT SETTING FINANCIAL GOALS. MAKING AN UNREALISTIC BUDGET. MAINTAINING POORLY FINANCIAL RECORD 5. USING CREDIT UNWISELY.

NOT HAVING ENOUGH INSURANCE FOR HOUSE AND VALUABLES. NOT HAVING AN EMERGENCY SAVINGS FUND.

8. MAKING MAJOR FINANCIAL DECISIONS WITHOUT PROFESSIONAL HELP 9. MAKING SPUR-OF-THE-MOMENT INVESTMENTS BASED ON TIPS. 10. NOT HAVING A WILL

5. EVALUATE AND REVIEW YOUR ACTIONS FINANCIAL PLANNING IS A DYNAMIC PROCESS. IT DOES NOT END WHEN YOU TAKE A PARTICULAR ACTION. YOU NEED TO REGULARLY REASSESS.

PERSONAL FINANCIAL PLANNING COMPONENTS OF PERSONAL FINANCIAL PLANNING

1. OBTAINING RESOURCES WILL COME FROM YOUR EMPLOYMENT OR PROFITS FROM A PERSONALLY OWNED BUSINESS. THESE RESOURCES WILL BE THE BASIS FOR ALL YOUR FINANCIAL ACTIONS.

B A N K SAVE AND INVEST PART OF THE INCOME YOU EARN. YOUR SAVINGS AND INVESTMENTS WILL PROVIDE AN ADDITIONAL INCOME SOURCE. B A N K

2. PLANNING BUDGETING THE SPENDING, SAVING AND INVESTING OF YOUR INCOME IS THE BASIS OF SUCCESSFUL FINANCIAL PLANNING.

3. SAVING LONG – TERM FINANCIAL SECURITY STARTS WITH A REGULAR SAVINGS PLAN FOR EMERGENCIES, UNEXPECTED BILLS, REPLACEMENT OF NEEDED HOME ITEMS. ONCE THE BASIC SAVINGS COMPONENTS HAS BEEN ESTABLISHED, ADDITIONAL MONEY SAVED MAY BE USED FOR INVESTMENTS THAT OFFER GREATER RETURN. B A N K

4. BORROWING MAINTAINING CONTROL OVER CREDIT BUYING HABITS WILL HELP YOU ACHIEVE FINANCIAL GOALS. THE OVERUSE AND MISUSE OF CREDIT ARE MAJOR CAUSES OF PERSONAL ECONOMIC DIFFICULTIES.

5. SPENDING LIVING EXPENSES AND OTHER FINANCIAL OBLIGATIONS SHOULD BE DETAILED IN A SPENDING PLAN. RESTRICT YOUR SPENDING

6. PROTECTING HAVE AN ADEQUATE INSURANCE COVERAGE FOR YOURSELF, YOUR FAMILY AND YOUR PROPERTY.

SELECT INVESTMENTS WITH MINIMAL RISKS. 7. INVESTING SELECT INVESTMENTS WITH MINIMAL RISKS.

8. SHARING TIMING DECISIONS TO TRANSFER MONEY OR PROPERTY TO OTHERS IS CRUCIAL TO THE FINANCIAL PLAN.

S U M M A R Y ADVANTAGES OF PERSONAL AND FAMILY FINANCIAL PLAN ADULT LIFE CYCLE FINANCIAL PLAN STEPS IN FINANCIAL PLANNING PROCESS COMPONENTS OF FINANCIAL PLANNING

END OF LECTURE