Personal Finance Concepts Phase 4



Personal Finance Concepts Phase 4

Personal financial planning is the methodology of maintaining your cash to attain particular financial fulfillment. This planning procedure permits you to control your financial scenario. We all settle on many choices every day. The majority of these choices is very straightforward and has fewer consequences. Some are intricate and have lifelong impacts on our personal and financial scenarios (highered.mcgraw-hill.com).

The process of a financial plan includes 7 main steps that are as follows:

Life Style Considerations

This is the way an individual wants to lead his life. It is all based on the current and future income and strategy of the individual.

Current and future income needs

In this first stage of the financial planning methodology, the individual verifies his present financial scenario as to salary, funds, living liabilities, and obligations. Getting ready a record of current holding and obligation equalizations and sums used for different things gives an establishment for financial planning activities. Particular monetary objectives are significant to financial planning. Others can prescribe monetary objectives for the person; nonetheless, he should choose which objectives to seek after. His financial objectives can run from using the greater part of his present earnings to improving an impressive savings and investment customize for his financial security in the future.

Final Disposition of Assets

This means giving up all your assets. This is done when a business goes bankrupt or if an individual has taken a lot of loans and do not have anything to pay back so he dispose offs his assets in order to pay back the loan.

Acquisition and disposal of personal assets

This happens in a crisis situation or if a person liquidates. Hence, one should make financial plans in a way that the individual never comes at a stage of disposing off all the assets. Acquisition of assets should be made on the basis of wants and needs.

Debt acquisition and retirement

In a process of debt acquisition, an investor consents to purchase a company's bad debt on a discount. An individual especially should avoid the acquisition of debt. Debt acquisition is beneficial to the creditor. The creditor might lower his losses that results from a client default.

Contingency Allowances

Contingency implies any unforeseen occasion, which might possibly happen in future. Contingency arranging is the essential and the precise first stage to financial planning.

Emergency cash funds

In the event, if the individual is not ready for contingencies ...