in8 - CHAPTER 1 LECTURE OUTLINE I. THE FINANCIAL PLANNING...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 1 LECTURE OUTLINE I. THE FINANCIAL PLANNING PROCESS (p. 4) Personal financial planning is the process of managing your money to achieve personal economic satisfaction. Step 1. Determine Your Current Financial Situation (p. 4) Determine your current financial situation with regard to income, savings, living expenses, and debts. Step 2. Develop Financial Goals (p. 5) Analyze your financial values and goals to set a course for action. Step 3. Identify Alternative Courses of Action (p. 5) Various alternatives associated with financial decision making are usually based on deciding to: Continue the same course of action ; for example, you may determine that the amount saved each month is still appropriate. Expand the current situation ; you may choose to save a greater amount each month. Change the current situation ; you may decide to buy U.S. savings bonds instead of using a regular savings account. Take a new course of action ; you conclude to use your monthly saving budget to pay off credit card debts. Creativity in decision making is vital to making effective choices. The more alternatives that are considered, the more likely a person or household will make wise financial choices. Step 4. Evaluate Your Alternatives (p. 6) Every decision closes off alternatives. The opportunity cost is what a person gives up by making a choice. This cost, commonly referred to as the trade-off of a decision, sometimes cannot be measured in dollars. Decision making will be an ongoing part of your personal and financial existence. Thus, you will need to consider the lost opportunities that result from your decisions. Uncertainty is a part of every decision. In many financial decisions, identifying and evaluating risk is a difficult task. The best way to consider risk in such decisions is to gather information based on your 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
CHAPTER 1 LECTURE OUTLINE experiences and those of others and refer to the research of financial planning sources. Relevant information is required at each stage of the financial planning process. Step 5. Create and Implement Your Financial Action Plan (p. 8) Develop a plan of action to achieve your goals. Step 6. Review and Revise Your Plan (p. 8)
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 5

in8 - CHAPTER 1 LECTURE OUTLINE I. THE FINANCIAL PLANNING...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online