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FMLY 2400 - LECTURE- PERSONAL AND FAMILY FINANCIAL PLANNING EXAM STUDY GUIDE
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FMLY 2400 - LECTURE- PERSONAL AND FAMILY FINANCIAL PLANNING EXAM STUDY GUIDE ...
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FMLY 2400 - LECTURE- PERSONAL ANDFAMILY FINANCIAL PLANNING EXAM
STUDY GUIDE
personal financial planning - Answer process of managing money to achieve personal
economic satisfaction
advantages of financial planning - Answer -points out problems that need to be
addressed
-up the odds of achieving future savings goals
-gives sense of freedom
-in a better place to respond to the things that may happen in life
why dont people plan - Answer -time consuming and a lot of work
-people worry about present issues and dont think about the future
-people think there isnt a point if they dont have the means
financial planning process - Answer 1. develop financial goals
2. determine current financial situation
3. identify alternative course of action
4. evaluate alternatives
5. create and implement a financial action plan
6. re evaluate and revise the plan
develop financial goals - Answer -analyze financial values and attitudes towards money
-what is your financial decision making process
determine current financial situation - Answer -prepare a list of current asset and debt
balances and amounts spent for various items
identify alternative course of action - Answer -continue as is, expand or change the
current situation or take a new course of action
evaluate alternative - Answer -take into consideration life situation, personal values and
current economic situation
-opportunity cost is what is given up by making a choice, cost referred to as a trade off
, of a decision can be measured in money or time
-consider lost opportunities that will result from decisions
-evaluate the risks faced, types of risk to consider: economic or product (interest rate,
inflation, liquidity, product) personal (death, loss of income, health, asset and liability)
create and implement a financial action plan - Answer -choose ways to achieve goals
-may require assistance from others
-financial planning information sources (printed materials, financial institutions, school
course and educational seminars, computers software internet and on line information
sources, financial specialists
what are financial goals influenced by - Answer 1. personal values and attitudes towards
money
2. time frame in which one wants to achieve goals (short, intermediate and long term)
3. type of financial need that drives goals
-different financial needs (tangible: consumer and durable product goals, intangible:
health, leisure, education, relationship goals)
4. life situation
-as society changes different types of financial needs evolve
-influenced by life events
life cycle approach to financial planning 4 basic stages in personal financial
management - Answer 1. early years (until mid 30s)
2. middle years (mid 30s-mid 50s)
3. middle years (50+)
4. retirement years
common financial goals and activated in life situation approach - Answer -obtain
appropriate career training
-create an effective financial record keeping system
-develop a regular savings and investment program
-accumulate an appropriate emergency fund
-purchase appropriate types and amounts of insurance coverage
-create and implement a plan for retirement goals
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