Financial Planning: Managing Your Money for Personal Economic Satisfaction

Financial Plan (Planning)

Financial plan is the process of managing your money to achieve personal economic satisfaction.

Financial Plan Incorporates:

• Formalized report - follows proper procedures, orderly, endorsed
• Summarizes current financial situation - Now the way it is
• Analyze financial needs - need to purchase for?
• Recommends future financial activities
• Measure progress toward financial goals

Advantages of Financial Plan:

1. Increases effectiveness in obtaining and using your financial resources - aids in credit, obtain capital, collateral
2. Increased control of your finances
3. Improved personal relationships
4. Freedom from financial worries

Financial Life Cycle:

1. Borrowing phase - school, home, family, purchase items
2. Accumulation phase - savings, investments, getting paycheck, pay-off, pay off borrowing phase
3. Spending phase - no more earned income, retirement

Budget:

Budget accounts for day to day spending. It must be well planned, better for unexpected occurrences, realistic, flexible, may need to shift funds, clearly communicated, and prioritize necessities.

Steps for Formal Financial Plan:

1. Determine financial condition
2. Develop financial goals - time frames
3. Develop courses of action - compare between different options, compare at risk and return, decide continue or change course
4. Create and implement financial action
5. Review and revise as needed - semi-annually, annually, life changing event

POD - Payable on Death, designated beneficiary to receive all of (client's) assets. Keeps you out of probate court. Supersedes last will and testament.

TOD - Transferable on Death, beneficiaries receive assets at the time of person's passing without going to probate investments.