1. What are the steps in personal financial planning? Describe each step.
- The steps in personal financial planning include:
Step 1: Determining Your Current Financial Situation
You need to determine what your current financial situation is when it comes to your income, savings, living expenses, and debts.
Step 2: Developing Financial Goals
What are your specific financial goals that you want to pursue, ranging from what you want to spend with your current income? Do you have any extensive savings or investment plans for your future?
Step 3: Identify the Alternative Courses of Action
Creativity in decision-making can have possible alternatives to be more effective and satisfying decisions.
Step 4: Evaluate Alternatives
Evaluate your possible courses of action, taking into consideration your life situation, personal values, and current economic conditions. Every decision makes alternatives, a decision to invest in stock may mean you cannot take a vacation, going to school means you can't work full time. Opportunity cost is what you give up by making a choice.
Step 5: Create and Implement a Financial Action Plan
Choose the ways you want to achieve your goals. As you'll achieve your immediate or short-term goals, your next priority will implement your financial action plan.
Step 6: Reevaluate and Revise Your Plan
As you regularly assess your financial decisions you can change your personal, social, and economic factors requiring more frequent decisions.
2. Identify a financial goal that you or someone else might have. What are the risks or costs associated with this goal?
- A financial goal that you could have could be buying a house. How is the house going to be purchased at the time, is there going to be a loan risking increase.
3. What are the advantages and disadvantages to shared decision-making?
- The advantages to shared decision-making supports conversations with better-informed decisions congruent with what matters. Disadvantages of shared decision-making can create competition between individuals who want to "win".
4. Why is it important to try to make financial decisions without emotions?
-It is important to try and make financial decisions without any emotions because emotions could negatively affect your business decisions, also stopping you from impulsively buying.
5. What are some of the resources that families and individuals can use to reach their financial goals? Why is it important to take stock of these resources when planning financial goals?
- Some resources families and individuals can use to reach their financial goals include budgeting, controlling spending habits, eliminating credit cards, set aside fixed percentages in your income, establishing an emergency fund account, etc. All such resources or ways will lead to reaching your financial goals. It's important to take stock of the resources when planning your financial goals because when you save money to achieve your goals, having discipline and management of your resources and income to achieve your goals helps.