Personal finance is the financial management which an individual or a family unit performs to budget, save, and spend monetary resources over time, taking into account various financial risks and future life events.
Financial planning is the process of developing a personal roadmap for your financial well being. The inputs to the financial planning process are: your finances, i.e., your income, assets, and liabilities, your goals, your current and future financial needs.
Main purpose of personal financial planning:
Personal financial planning is arranging to spend, save, and invest money to live comfortably, have financial security, and achieve goals. Everyone has different financial goals. Goals are the things you want to accomplish. For example, getting a college education, buying a car, and starting a business are goals.
A step-by-step guide to build a personal financial plan:
- Set financial goals.
- Create a budget.
- Plan for taxes.
- Build an emergency fund.
- Manage debt.
- Protect with insurance.
- Plan for retirement.
- Invest beyond your 401(k).
Financial Planning is the process of estimating the capital required and determining it's competition. It is the process of framing financial policies in relation to procurement, investment and administration of funds of an enterprise.
The Life Cycle Financial Planning:
Life-Cycle Financial Planning helps to understand the dynamic nature of your family's financial risks presented and developed in a plan that evolves over time to meet those changing needs. The stages of life-cycle planning can be seen in 3 simple phases: Accumulation, Preservation and Transfer.
Seven Quick Ways To Set Yourself Up For Success:
- Set up automatic deductions from checking to savings.
- Amp up your retirement savings.
- Create a calendar.
- Put bills on auto pay.
- Build a cash cushion.
- Invest like a pro—without the hassle.
- Make financial date-night a regular event.
Written by: Jeevanantham G
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