Financial planning involves using current resources and investment options to achieve life goals. There are three components to financial planning: current resources, investment options, and financial goals, with the goal being to use resources and options to meet financial goals. The document outlines six steps to financial planning: savings, loans, insurance, investment plan, tax plan, and retirement plan. It provides brief descriptions of each step.
4. Financial planning is the process of achieving your life goals by
using different investment options with your current resources
through proper and disciplined money management. So
Financial Planning is not only about money, but it is all about
life, about fulfilling your wishes, dreams, aspirations and your
enjoyment in achieving them.
There are three major components in the
Financial Planning process:
Current Resources (CR)
Investment Options (IO)
Financial Goals (FG)
Financial Planning: CR + IO = FG
5. Six steps of Financial
Planning
SAVINGS
LOANS
INSURANCE
INVESTMENT PLAN
TAX PLAN
RETIREMENT PLAN
6. 1.SAVINGS
Saving is income not spent, or deferred consumption.
Methods of saving include putting money aside in, for
example, a deposit account, a pension account, an
investment fund, or as cash. Saving also involves reducing
expenditures, such as recurring costs.
7. 2. LOANS
In finance, a loan is the lending of money by one or more
individuals, organizations, or other entities to other
individuals, organizations etc.
8. 3. ISURANCE
Insurance is a means of protection from financial
loss. It is a form of risk management, primarily
used to hedge against the risk of a contingent or
uncertain loss.
10. 5. TAX PLAN
Tax planning is the analysis of a financial situation or plan
from a tax perspective. The purpose of tax planning is to
ensure tax efficiency.
11. 6. RETIREMENT PLAN
Retirement planning is the process of
determining retirement income goals and the
actions and decisions necessary to achieve those
goals.
