final wk 6
dfresh90
BS-MG353_Week1_Chapter1.ppt
PFIN
5
Understanding the Financial Planning Process
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
BILLINGSLEY/ GITMAN/ JOEHNK/
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1 Identify the benefits of using personal financial planning techniques to manage your finances
2 Describe the personal financial process and define your goals
3 Explain the life cycle of financial plans, the role they play in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners
LEARNING OUTCOMES
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4 Examine the economic environment’s influence on personal financial planning
5 Evaluate the impact of age, education, and geographic location on personal income
6 Understand the importance of career choices and their relationship to personal financial planning
LEARNING OUTCOMES (continued)
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Rewards of Sound Financial Planning
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
- Improving your standard of living
- Spending money wisely
- Accumulating wealth
PFIN5 | CH1
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Exhibit 1.1
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Organizational Planning Model
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Example of an Exhibit slide.
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Personal Financial Planning
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
- Systematic process that considers important elements of an individual’s financial affairs to fulfill financial goals
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Exhibit 1.3
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Six-Step Financial Planning Process
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Example of an Exhibit slide.
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Financial Goals
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
- Results that an individual wants to attain
- Utility and cost are to be considered when evaluating alternative qualities of life, spending patterns, and forms of wealth accumulation
- Money and utility are linked to psychological concepts of values, emotion, and personality
- Financial planning is an important part of the conflict resolution process
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Target Dates on Financial Goals
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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- Goal dates: Target dates in the future when certain financial objectives are expected to be completed
- Long-term goals
- Indicates wants and desires for a period covering about 6 years out to the next 30 or 40 years
- Short-term financial goals
- Set each year and cover a 12-month period
- Intermediate goals
- Bridge the gap between short- and long-term goals
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Exhibit 1.4
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Personal Financial Planning Life Cycle
PFIN5 | CH1
Example of an Exhibit slide.
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Types of Financial Planning
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
- Asset acquisition
- Liability and insurance
- Savings and investment
- Employee benefit
- Tax
- Retirement and estate
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Exhibit 1.5
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
How a $1,000 Investment Grows Over Time
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Example of an Exhibit slide.
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Financial Planning Concerns
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
- Managing two incomes
- Managing employee benefits
- Managing finances in tough economic times
PFIN5 | CH1
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Financial Planning Players
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
- Government
- Source of revenue for business and wages for consumers
- Business
- Important part of the circular flow of income that sustains a free enterprise system
- Consumers
- Consumer choices determine the kinds of goods and services that businesses provide
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Exhibit 1.6
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Financial Planning Environment
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Example of an Exhibit slide.
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Phases of Economic Cycles
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
PFIN5 | CH1
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Exhibit 1.7
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Business Cycle
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Source: Adapted from William Boyes and Michael Melvin, Economics, 8th ed. (Cengage, 2011), p. 135.
Example of an Exhibit slide.
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Economy
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
PFIN5 | CH1
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Factors that Determine the Personal Income
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
- Place of residence
- Difference in salaries earned
- Difference in living costs
- Career
- Social, demographic, economic, and technological trends influence decisions regarding the fields that offer best opportunities for future
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Steps for Career Planning
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
- Identify interests, skills, needs, and values
- Set specific long- and short-term career goals
- Develop and use an action plan to achieve those goals
- Review and revise career plans as the situation changes
PFIN5 | CH1
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
- Standard of living
- Average propensity to consume
- Wealth
- Tangible assets
- Personal financial planning
- Utility
- Goal dates
KEY TERMS
- Peak
- Contraction
- Trough
- Inflation
- Consumer price index
- Purchasing power
- Expansion
- Flexible-benefit (cafeteria) plans
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Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SUMMARY
- Sound financial planning is necessary for achieving financial objectives
- Planning what to do with one’s money and spending and investing it wisely involves personal financial planning
- Financial goals help in achieving financial goals
- Financial planning constitutes a dynamic environment including business and consumers
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Summary slide design.
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