Personal Financial Planning Flashcards, test questions and answers

Discover flashcards, test exam answers, and assignments to help you learn more about Personal Financial Planning and other subjects. Don’t miss the chance to use them for more effective college education. Use our database of questions and answers on Personal Financial Planning and get quick solutions for your test.

What is Personal Financial Planning?

Personal financial planning is an essential component of being able to manage one’s finances and ensure that there is enough money to meet the needs of both present and future goals. Financial planning involves assessing individual or household income, expenses, debt obligations, investments and taxes in order to create a budget for the short-term and long-term objectives. It requires evaluating current financial status, setting financial goals, creating strategies for achieving those goals, and implementing them.An effective personal financial plan should include an analysis of current assets such as bank accounts, stocks, bonds and other investments; an assessment of liabilities including mortgages, loans or credit card debts; a review of insurance coverage; retirement savings options; estate planning considerations; tax implications related to certain activities; identification of potential investment opportunities; risk management approaches to protect against unforeseen circumstances; periodic review and updating of the plan when needed. The plan should also provide guidance on how best to save money while still meeting lifestyle objectives in the face of rising costs over time.Having a solid personal financial plan can help individuals realize their short-term and long-term objectives by providing direction on how best to prioritize resources so that they are used most effectively towards those desired outcomes. Making sound decisions about saving for emergencies, investing for retirement or education costs require careful consideration along with comprehensive knowledge about available options which often necessitates professional advice from qualified professionals like certified public accountants (CPAs). Having a well thought out personal financial plan will enable individuals to have greater control over their finances now as well as lay the groundwork for future success.