Personal Financial Planning: Evaluating Goals and Risks
Planning our finances is the process of identifying goals for managing assets and liabilities cash flows in the medium and long term, and implementation of appropriate steps to achieve them, with due professional advice.
To simplify, we assume assess where we are today (economically speaking, assets, debts, income and expenses), where we are going, and what is more important, where we want to go and how we will.
On the Personal Financial Planning, everything revolves around the person and their wants and needs, not including business plans.
It is a process that develops over time, with appropriate modifications as conditions change and the environment.
In this process, the goals are identified and designed according to a set amount and a time to reach them (How much money does you need and how long you get).
Professional counseling gives an external and objective vision plan development, brings expertise and market knowledge always favoring customer interest on shareholders. The contribution of the professional is very important, considering that money brings with it many emotions, which may adversely affect the achievement of the objectives.
Today we can say that all individuals and families, regardless of their socioeconomic status, need a financial plan. Social and labor mobility is much higher, a person throughout his life can change jobs several times, or even career.
It is possible that those who today own a business, at some point have to find a job as an employee, and perhaps ever again be independent. Social security systems are now collapsed, causing everyone must provide their needs for retirement, and this period is being expanded due to the increased life expectancy.
Close off accounts immediately the amount of credit you have available, which could hurt your credit history. When you apply for credit, the lender entity checks how your credit is already using -what is called utilization ratio.
On the other hand should consider the risk of cards. So before making a decision lightly should analyze the situation to see which position gives you more profits with less risk.
The Modules of a Personal Financial Plan:
- CASH FLOW (all income – all expenses)
- STATUS SHEET (everything you have – all you should)
- INVESTMENT PLAN
- PLAN OF INHERITANCE
- TAX PLAN
- RISK PLAN
Each of these modules can be developed in such detail and depth as we wish.