Your SlideShare is downloading. ×
Introduction to Financial Planning
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Introducing the official SlideShare app

Stunning, full-screen experience for iPhone and Android

Text the download link to your phone

Standard text messaging rates apply

Introduction to Financial Planning

386
views

Published on


0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
386
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
21
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Personal Finance Financial Planning: Why It’s Important to You 1-
  • 2. WHY STUDY PERSONAL FINANCE?
    • Achieve financial success.
    • Financial success may not have the same meaning to everyone.
      • Accumulating a lot of money.
      • Ability to purchase goods and services.
      • Live credit-free.
    1-
  • 3.
    • What makes you happy now?
    • What do you think will make you happy in 5 years?
    • What are your financial planning concerns?
    • Are your financial planning concerns the same as your parents or grandparents?
    • What would you do if you won the lottery?
    1-
  • 4. Your Goals in Life
    • Financial goals
      • Financial independence is defined as having enough income or resources to be self-reliant.
      • Consumption today versus consumption in the future.
    • Nonfinancial goals
      • Family, children, education, religious, social, etc.
      • Finances can affect your ability to attain these goals.
    1-
  • 5. The Principle of Diminishing Marginal Satisfaction
    • Satisfaction from current consumption increases but at a decreasing rate.
    • People enjoy their current purchases but as they purchase more and more, their satisfaction decreases.
    • At a certain income level, individuals are willing to postpone current consumption and save money.
    • Saving money facilitates the attainment of financial and nonfinancial goals.
    1-
  • 6. ACHIEVING FINANCIAL GOALS THROUGH PLANNING
    • Key to achieving all goals
    • Life-cycle planning suggests that financial planning is a lifelong process.
      • Career development
      • Family formation
      • Retirement
    • Major financial planning areas
      • Different phases of life impact the importance of the various components of financial planning
    1-
  • 7. Major Financial Planning Areas
    • Consumption and Savings Planning
    • Debt Planning
    • Insurance Planning
    • Investment Planning
    • Retirement Planning
    • Estate Planning
    • Income Tax Planning
    • Career Planning
    1-
  • 8. Life-Cycle Financial Planning (assumes children/marriage) 1- Life-Cycle Phases Financial Planning Areas Young adult (18 – 25) Consumption and savings; career Family formation (26 – 35) Consumption and savings; career; debt; insurance; income taxes Family development (36 – 49) Investment; retirement; income taxes Family maturity (50 – 60) Investment; retirement; estate Retirement (60 – ?) Estate; income taxes
  • 9. A Planning Approach
    • Step 1. Determine concrete goals .
          • Broad goals
          • Determine the specific pieces to achieve that goal
    • Step 2. Create an action plan.
          • How will you achieve the goals stated in step 1? How much will you save each month and where will the money be invested?
    • Step 3. Evaluate performance.
          • At least annually, evaluate steps 1 and 2 to determine if any adjustments should be made in the action plan or goals.
    • Step 4. Decide on a future course of action.
          • Is your goal realistic or should it be reevaluated?
    1-
  • 10. Financing your Goals
    • Determine the amount of annual savings to finance your goals.
    • Establish a Savings Plan .
    1-