© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Understanding the Financial Planning Process #1

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1. Define Personal Financial Planning.

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Personal Financial Planning S ystematic process that considers important elements of an individual’s financial affairs in order to fulfill financial goals

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2. What are the rewards of sound financial planning?

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Rewards of Sound Financial Planning Improving Your Standard of Living Spending Money WiselyAccumulating Wealth

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Organizational Planning Model

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3. What are the six steps in the Financial Planning Process?

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Six-Step Financial Planning Process 1. Define financial goals

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Six-Step Financial Planning Process 1. Define financial goals2. Develop financial plans and strategies

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Six-Step Financial Planning Process 1. Define financial goals2. Develop financial plans and strategies3. Implement financial plans and strategies

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Six-Step Financial Planning Process 1. Define financial goals2. Develop financial plans and strategies3. Implement financial plans and strategies4. Develop and implement budgets

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Six-Step Financial Planning Process 1. Define financial goals2. Develop financial plans and strategies 3. Implement financial plans and strategies 4. Develop and implement budgets5. Use financial statements to evaluate results

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Six-Step Financial Planning Process 1. Define financial goals2. Develop financial plans and strategies3. Implement financial plans and strategies4. Develop and implement budgets5. Use financial statements to evaluate results 6. Redefine goals, revise plans as circumstances change

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4. What are the major plan categories in achieving financial goals?

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Plans to Achieve Your Financial Goals Asset acquisition planning

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Plans to Achieve Your Financial Goals Asset acquisition planningLiability and insurance planning

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Plans to Achieve Your Financial Goals Asset acquisition planningLiability and insurance planningSavings and investment planning

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Plans to Achieve Your Financial Goals Asset acquisition planningLiability and insurance planningSavings and investment planningEmployee benefits planning

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Plans to Achieve Your Financial Goals Asset acquisition planningLiability and insurance planningSavings and investment planningEmployee benefits planning Tax planning

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Plans to Achieve Your Financial Goals Asset acquisition planningLiability and insurance planningSavings and investment planningEmployee benefits planningTax planningRetirement and estate planning

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5. What are the two important aspects of the financial planning environment?

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1. The Players Financial planning environment contains various interrelated groups of players, each fulfilling certain goals.

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2. The Economy Monetary Policy Controls money supply Used to stimulate or contract economic growth Fiscal Policy Controls levels of taxation Sets levels of government spending

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6. What determines your personal income ?

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What Determines Your Personal Income? Demographics and income – Age, marital status Education Where you live Career