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Personal finance is the study of personal and family resources considered important in achieving financial success. It involves how people spend, save, protect, and invest there financial resources. It includes budgeting, tax management, cash management , use of credit cards, borrowing, major expenditures, risk management, investments, retirement planning, and estate planning.
Chapter one says personal financial planning is the development and implementation of coordinated and integrated long range plans to achieve financial success. Most people learn finance from there bad experiences, therefore they have unhealthy habits. A trade-off is giving up one thing for another. Financial objectives are rarely achieved with out fore going or sacrificing current consumption. By investing your money in savings you can invest for long-term goals.
Most people need to assume some form of financial planning to achieve their financial objectives. Financial planning should reflect an individual’s or family’s values and life-cycle circumstances and include appropriate objectives in three broad areas. Plan for spending, plan to counter risk, and plan for capital accumulation. Success in financial planning requires an understanding of one’s values, explicitly stated financial goals, certain assumptions about the economy, and logical and consistent financial strategies.
Financial statements are compilations of personal financial data designed to furnish information about the way in which money has been used and about the financial condition of the individual or family. The balance sheet provides information on what you own, what you owe, and what the net result would be if you paid off all of your debts. The cash-flow statement lists income and expenditures over a specific period of time, such as the previous month or year.
Your personal values are the starting point in financial planning and budgeting. Budgeting is a process of projecting, organizing, monitoring, and controlling future income and expenditures. The purpose of budgeting is to reach financial goals. In the goal-setting phase of budgeting, goals must be specific. In particular, they should contain dollar amounts and target dates for achievement.
In the organization phase of budgeting, which focuses on the structural and mechanical aspects of budgeting choose a recording format, select either the cash or accrual basis of accounting, choose various budget classifications, and select the time period for the budget. It is important to maintain a positive attitude toward budgeting and to maintain flexibility.
The decision-making phase of budgeting requires you to make realistic budget estimates for income and expenditures as well as to resolve…

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