All the details for personal financial planning.

1. PERSONAL FINANCIAL PLANNING
BY - DEBASISH MAHAPATRA.

2. CONTENTS-:
1. Introduction – what is Planning and personal financial planning.
2. Benefits of financial planning
3. Financial planning pyramid.
4. Financial planning process and steps.
5. Financial planning concepts.
6. Factors determining financial planning.
7. Basis of financial planning.
8. Conclusion.

3. 1.Introduction-:
1. What is planning - Planning is the process of thinking about the
activities required to achieve a desired goal. It is the first and
foremost activity to achieve desired results. It involves the
creation and maintenance of a plan, such as psychological
aspects that require conceptual skills.
2. A proper planning prevents poor performance, So a proper
planning is necessary in every day life whether it is related to
personal financial planning or in any other sports related
activities , at the time of presenting your views before
everyone, preparing for any type of exam such as competitive
exams or academic exams, planning a vacation, et cetera.
3. Planning thus precedes all efforts and action, as it is the
plans and programmes that determine the kind of decisions
and activities required for attainment of the desired goals.

4. Personal Financial Planning-:
1. Financial planning has become one of the most important
aspects of life. Correct planning helps you in achieving your
personal financial goals and keeps you financially secure for
unforeseeable situations.
2. In general usage, a financial plan is a comprehensive evaluation
of an individual's current pay and future financial state by using
current known variables to predict future income, asset values
and withdrawal plans. The entire gamut of financial planning is
explained by RETIIRS, which means-:
R – RISK, E – ESTATE, T – TAX, I –
INVESTMENT, I – INSURANCE,
R – Retirement, S – SAVINGS.
3. A financial plan acts as a guide as you go through life’s journey.

5. Benefits of financial planning-:
1. Correctly managed cash flow.
2. Personal finances.
3. Achieving personal goals.
4. Clear retirement goals.
5. A secure retirement income.
6. Reduced risk.
7. Insurance.

6. Financial planning pyramid -:

7. Financial planning process-:

8. The steps in the financial planning process are as follows-:
 Establish and define the relationship with the client-:
The financial planning professional informs the client about the
financial planning process, the services the financial planning
professional offers, and the financial planning professional’s
competencies and experience. The financial planning
professional and the client determine whether the services
offered by the financial planning professional and his or her
competencies meet the needs of the client.
 Collect the client’s information-:
The financial planning professional and the client identify the
client’s personal and financial objectives, needs and priorities
that are relevant to the scope of the engagement before making
and/or implementing any recommendations. The financial
planning professional collects sufficient quantitative and

9.  Analyze and assess the client’s financial status-:
The financial planning professional analyzes the client’s
information, subject to the scope of the engagement, to gain
an understanding of the client’s financial situation. The
financial planning professional assesses the strengths and
weaknesses of the client’s current financial situation and
compares them to the client’s objectives, needs and
priorities.
 Develop the financial planning recommendations and
present them to the client-:
The financial planning professional considers one or more
strategies relevant to the client’s current situation that could
reasonably meet the client’s objectives, needs and priorities;
develops the financial planning recommendations based on
the selected strategies to reasonably meet the client’s
confirmed objectives, needs and priorities; and presents the

10.  Implement the financial planning recommendations-:
The financial planning professional and the client agree on
implementation responsibilities that are consistent with the
scope of the engagement, the client’s acceptance of the
financial planning recommendations, and the financial
planning professional’s ability to implement the financial
planning recommendations. Based on the scope of the
engagement, the financial planning professional identifies and
presents appropriate products and services that are consistent
with the financial planning recommendations accepted by the
client.
 Review the client’s situation-:
The financial planning professional and client mutually
define and agree on terms for reviewing and re-
evaluating the client’s situation, including goals, risk
profile, lifestyle and other relevant changes. If conducting
a review, the financial planning professional and the
client review the client’s situation to assess progress

11. Financial planning concepts-:
 Cash flow analysis-: It includes – Sources of cash, Uses of cash, change in cash balance.
 Current asset allocation-: Asset allocation is an investment portfolio technique that aims to balance
risk by dividing assets among major categories such as cash, bonds, stocks, real estate, and
derivatives. Each asset class has different levels of return and risk, so each will behave differently
over time.
 Networth-:Your net worth is the amount by which your assets exceed your liabilities. In simple
terms, net worth is the difference between what you own and what you owe. If your assets exceed
your liabilities, you have a positive net worth. ... Your net worth provides a snapshot of
your financial situation at this point in time.
 It is calculated as -: Total assets(-)Total liabilities
 Risk profiling-: Risk profiling is a process Advisers use to help determine the optimal levels of
investment risk for clients. It aims to identify the risk required to meet your investment objectives,
your risk capacity, and your tolerance to risk.
 Emergency fund analysis-:An emergency fund is a readily available source to help you
solve financial crises due to unexpected reasons. This fund helps improve financial security by
creating highly liquid cash to meet any emergency and reduce the use of unsecured loans.
 Protection planning-:Just as you implement risk management strategies to protect your investments,
you should have strategies in place to protect yourself. Insurance is a key element of any financial
strategy.

12. Estate planning-:Estate planning is the process of arranging
and planning your succession and financial affairs. ...Assets, Life Insurance,
Pensions, Real Estate, Cars, Personal Belongings, and Debts are all part of
one's estate.
Tax planning-:Tax planning is the process of analysing a financial plan or a
situation from a tax perspective.The objective of tax planning is to make sure
there is tax efficiency. With the help of tax planning, one can ensure that all
elements of a financial plan can function together with maximum tax-efficiency.

13. Basis of financial planning-:
 Life cycle of individual -:
 Childhood stage – Learner.
 Young unmarried stage – Earner.
 Young married stage – Partner.
 Young married with children stage – Parent.
 Married with older children stage – Provider.
 Post family/pre-retirement stage – Empty Nester.
 Retirement stage – Enjoyer.
 The 3 phases of one’s life -:
 Birth and education – 22 to 23 years.
 Earning years – 30 to 40 years.
 Retirement – At 58 or 60 years.

14. Conclusion-:
 Introduction Personal finance is all about how to effectively manage
your money in order to achieve set goals. To achieve financial goals
it is crucial that you adequately plan your life such as how, when and
on what to spend your money because this discipline will enable you
to stick to your goals. Therefore, you have to have a budgeted life.
Budget refers to the financial plan which contains information on
expected expenses and income within a set period of time.
 In this course (personal financial planning), we do this assignment
and carry out some conclusion. All of that, were about its beneficial
of financial planning, what should we do or how we can prevent
when we face to financial problem and planning for the better life
style. For this personal financial planning is a kind of useful soft skills
in our future life, it will bring us improvement of standard of living and
achieve or goals. After discussion in this assignment, we gain of
understanding for financial planning process, we also learn more
about beneficial of using the personal financial planning by