Life cycle of financial planning

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Life cycle of financial planning

  1. 1. Life Cycle of Financial Planning<br />Take Charge of Your Finances<br />
  2. 2. Financial Planning<br />Many people follow a similar financial pattern during their life<br />BUT<br />Everyone has an individualized financial plan. <br />Financial planning is a tool used to achieve financial success based upon the development and implementation of financial goals.<br />
  3. 3. Financial Plan Influences<br />Financial planning is influenced by many factors:<br />These factors can be expected and unexpected.<br />
  4. 4. Financial Goals<br /><ul><li>Financial goals are specific objectives to be accomplished through financial planning
  5. 5. Financial goals should be SMART goals:
  6. 6. Specific
  7. 7. Measurable
  8. 8. Attainable
  9. 9. Realistic
  10. 10. Time Bound</li></ul>An essential step to creating a financial plan<br />
  11. 11. SMART Financial Goals<br />
  12. 12. Lifestyle Conditions<br />
  13. 13. <ul><li>There is a typical life cycle pattern that applies to most people
  14. 14. Includes three stages
  15. 15. The amount of time it takes to move through the financial life cycle varies for every individual</li></ul>Financial Life Cycle<br />A life cycle is a series of stages in which an individual passes during his or her lifetime<br />
  16. 16. An Individual’s Financial Life Cycle<br />Approaching<br />Retirement<br />Years<br />Single * Marriage * Start and Raise Family<br />Retirement Years<br />Stage 3: Wealth Distribution<br />$<br />Stage 2: Wealth Accumulation<br />Stage 1: Basic Wealth Protection<br />Years of Age<br />0<br />20<br />30<br />40<br />50<br />60<br />70<br />80<br />
  17. 17. An Individual’s Financial Life Cycle<br />
  18. 18. Personal Financial Management Pyramid <br />Wealth Distribution<br />‘giving it to your chosen ones’<br />Estate<br />Planning<br />Building Long <br />Term Wealth: <br />goal setting, retirement <br />planning, investments<br />Wealth Accumulation<br />‘giving it to yourself’<br />Building Financial Security: <br />goal setting, savings plan, <br />home ownership, children’s education<br />Risk and Tax Management:<br />goal setting, insurance, protection against <br />economic loss, income tax reduction<br />Basic Wealth Protection<br />‘quit giving it to others’<br />Credit and Debt Management: <br />goal setting, credit use, avoiding credit abuse, debt reduction<br />Cash Management: <br />goal setting, emergency, cash reserve, record keeping, spending plans, net worth, and income-expense statements<br />
  19. 19. Life Cycle Events Activity<br /><ul><li>People in certain age groups tend to have similar life cycle needs
  20. 20. What activities and events require financial planning during each stage?
  21. 21. High School Ages 13-17
  22. 22. Young Adult Ages 18-24
  23. 23. Adult With or Without Children Ages 25-34
  24. 24. Working Parent or Adult Ages 35-44
  25. 25. Midlife Ages 45-54
  26. 26. Pre-Retirement Ages 55-64
  27. 27. Retired Ages 65 and older</li></ul>Identify someone you know in each category<br />
  28. 28. Traditional Age Group Financial Planning Needs<br />High School Ages 13 – 17<br />Developing a plan for eventual independence<br />Preparing for career<br />Evaluating future financial needs and resources<br />Exploring financial systems – banks, etc.<br />Developing a personal system of record keeping<br />
  29. 29. Traditional Age Group Financial Planning Needs<br /><ul><li>Young Adult Ages 18 – 24
  30. 30. Establishing a household
  31. 31. Training for a career
  32. 32. Earning financial independence
  33. 33. Determining insurance needs
  34. 34. Establishing credit
  35. 35. Establishing savings
  36. 36. Creating a spending plan
  37. 37. Developing a personal financial identity
  38. 38. Developing a personal financial system</li></li></ul><li>Traditional Age Group Financial Planning Needs<br /><ul><li>Adult With or Without Children Ages 25 – 34
  39. 39. Child-bearing
  40. 40. Child-raising
  41. 41. Starting an education fund for children
  42. 42. Expanding career goals
  43. 43. Managing increased need for credit
  44. 44. Discussing and managing additional insurance needs
  45. 45. Creating a will
  46. 46. Maximizing financial management by all members of household</li></li></ul><li>Traditional Age Group Financial Planning Needs<br />Working Adult or Parent Ages 35 – 44<br />Upgrading career training<br />Building on children’s education fund<br />Developing protection needs for head-of-household<br />Need for greater income due to expanding needs<br />Establishing retirement goals<br />
  47. 47. Traditional Age Group Financial Planning Needs<br />Midlife Ages 45 – 54<br />Assisting with higher education for children<br />Investing<br />Updating retirement plans<br />Developing estate plans<br />
  48. 48. Traditional Age Group Financial Planning Needs<br />Pre-Retirement Ages 55 – 64<br />Consolidating assets<br />Planning future security<br />Re-evaluating property transfer<br />Investigating retirement part-time income or volunteer work<br />Evaluating expenses for retirement and current housing<br />Meeting responsibilities of ageing parents<br />
  49. 49. Traditional Age Group Financial Planning Needs<br /><ul><li>Retired Ages 65 and older
  50. 50. Re-evaluating and adjusting living conditions and spending as related to health and income
  51. 51. Adjusting insurance programs for increasing risks
  52. 52. Acquiring assistance in management of personal and financial affairs
  53. 53. Finalizing estate plan
  54. 54. Finalizing will or letter of last instructions</li></li></ul><li>True or False?<br />Everyone has the same financial plan.<br />

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