Elements Of Financial Planning

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• Define the financial planning process Financial planning process can be defined as the ability to properly outline goals and assess the possibility of implementing those goals. In other words, it is a projection of where one intends to be and understanding how to arrive at that financial destination. Financial planning process requires flexibility because of the changing nature of our economic environment; therefore, even in defining our goals, a careful attention should be given to identifying and evaluating new choices so that when changes occur, our financial plans can move along those changes. • List the elements of a good financial plan. A good financial plan has various elements. Below is a list of a good financial plan. Defining…show more content…
There are many personal or “micro” factors that affect one’s financial planning decision. Among such factors includes: Family Structure: The level of planning as a single person is far different from when the plan includes more than a single person. For instance, a man that has a family would by every stretch of the imagination include his partner in the financial plan. Further, the plan becomes larger when such partners begin to have children that have to be supported as the society demands. So the larger the dependency, the more financial planning decision is affected. In some society, the man who is considered the bread winner of the home have to plan and make financial decisions beyond the nuclear family needs, but could also involve extended relations as the case maybe. In the words of Siegel and Yacht (2009), “Providing for others increases income needs” (p. 10) and therefore, family structure constitute a factor that affect our financial planning decision. Another factor that affects our financial planning decision…show more content…
Like personal or “micro” factors that affect our financial planning decisions, there are various important economic factors that affect our financial planning decisions as well. Among these factors are: Business Cycles: There are elements in the business cycles that affect our financial planning decision and these elements are the gross domestic product (GDP), recession, and depression. This is a time when the economy expands in various ways which is termed as growth and when the economy contrasts, it is said to shrink in growth. Obviously, this scenario largely affects our financial planning decision because when the economy expands, it is much productive to see the actualization of our plans. However, because the business environment cannot be consistently and positively predicted, the economy could, therefore, experience contraction. Contraction, as we understood, is a period of the market correction or a time when the market regains its balance after a season of growth (Siegel & Yacht, 2009). The business cycles, indeed affect our financial planning decisions. Another economic factor that affects our financial decision
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