FINANCE AND PLANNING
Finance is a field that deals with the study
of investments. It includes the
dynamics of assets and liabilities over time under conditions of different degrees of
uncertainties and risks. Finance can also be defined as the science of money
management.
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.
When planning personal
finances, the individual would consider the suitability to his or her needs of
a range of banking products (checking, savings accounts, credit
cards and consumer loans) or investment private equity, (stock market, bonds, mutual
funds) and insurance (life insurance, health insurance, disability
insurance) products or participation and monitoring
of and- or employer-sponsored retirement plans, social security benefits,
and income tax management.
Personal financial planning process
The key component of
personal finance is financial planning, which is a dynamic process that
requires regular monitoring and re-evaluation.
1.
Assessment: A person's financial situation is assessed by
compiling simplified versions of financial statements including balance sheets and income statements.
A personal income statement lists personal income and expenses.
2.
Goal
setting: Having multiple goals is common, including a
mix of short- and long-term goals. Setting financial goals helps to direct
financial planning. Goal setting is done with an objective to meet specific
financial requirements.
3.
Plan
creation: The financial plan details
how to accomplish the goals. It could include, reducing unnecessary expenses,
increasing the employment income, or investing in the stock market or better
still try something new.
4.
Execution: Execution of a
financial plan often requires discipline and perseverance. It is the most difficult part of the steps. Many
people obtain assistance from professionals such as accountants, financial
planners, investment advisers, and lawyers.
5.
Monitoring and reassessment: As time passes, the financial plan is monitored for possible
adjustments or reassessments. As it is said “nothing is permanent”
Personal circumstances differ considerably, with respect to
patterns of income, wealth, and consumption needs. Tax and finance laws also
differ from country to country, and market conditions vary geographically and
over time. This means that advice appropriate for one person might not be
appropriate for another. A financial
advisor can
offer personalized advice in complicated situations.
Money making strategy of 21st century
1. Know what you want.
2. enquire about it from others.
3. Follow your passion.
4. Refuse to be discourage.
5. succeed.
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