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PERSONAL FINANCIAL PLANNING :pen: - Coggle Diagram
PERSONAL FINANCIAL PLANNING
:pen:
The Financial Planning Process
Benefits
Improved personal relationships
Greater financial control
Reduced financial stress
Better resource protection
Six-Step Financial Planning Process
Determine your current financial situation :check:
Develop financial goals :check:
Identify alternative courses of action :check:
Evaluate alternatives :check:
Create and implement a financial action plan :check:
Review and revise your plan regularly :check:
Factors Influencing Financial Planning
Economic Factors
Supply & demand
Global influences
Personal Factors
Values
Employment status
Life events
Rule of 72
Estimate how long it takes for your money to double at a certain interest rate.
Formula: > 72 ÷ interest rate = years to double
Developing Personal Financial Goals
Goal Categories
Consumer products
Durable goods
Intangible purchases
S.M.A.R.T. Goals
Measurable
Specific
Action-oriented
Realistic
Time-based
Types of Goals
Intermediate: 1–5 years
Long-term: >5 years
Short-term: <1 year
Opportunity Costs & Time Value of Money
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Opportunity Cost
What you give up (time, money, resources) when choosing one option over another.
Time Value of Money (TVM)
Future Value (FV)
Present Value (PV)
Annuity
Simple Interest Formula: > Interest = Principal × Rate × Time
Achieving Financial Goals in Different Life Situations
Develop a Flexible Financial Plan
Analyze financial needs
Recommend future actions
Evaluate your current situation
Major Areas of Personal Finance
Spending
Managing risk
Borrowing
Saving
Investing
Planning
Obtaining
Retirement & estate planning
Good Financial Habits
Insurance coverage
Smart tax and investment decisions
Budgeting