Stages of Financial Planning Process

There are several steps to be followed in conducting effective financial planning.

1. Checking the current financial situation
   Start by examining current financial situation with great attention to income, savings, living expenses, and debt. Remember the adage "great pegs than the pole" This often happens in modern society anywhere in the world, especially the middle class youth.You will need a lot of accurate information about investments in particular emerging today, the new policies in the insurance world. benefit pension plans and information on how to apply the tax rules can affect any programs or investment product.
2. Set life goals and financial
   The purpose of life and the specific financial planning is very important in a financial. Extremely diverse financial goals, financial goals could be like how we spend all our income or start planning to save and invest for the sake of financial stability in the future. client's goals should be based on the conditions of work, values ​​and their current financial condition.
   By setting financial goals, you determine how much risk to be in the face. consider how best to integrate information risk is based on personal experience and others that can be found in the source of financial planning. Short-term goals are things that can be achieved within one year, such as saving for a vacation or plan a small scale debt. Medium-term goals ranging from 2-5 years. temporary, long-term goals can be achieved within a period of 5 years or more. eg preparing pension funds for children's education in college, purchase a villa for a vacation.
   
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Opportunity Cost and the Time Value of Money

Opportunity Cost and the Time Value of Money

Have you ever noticed when making a decision of some options, meaning you can set aside other options? In any financial decision, you give up something to get the option that you think is better. For example, the decision to reduce spending in order to invest in order to meet your future needs.
         The decision that you take into account everything can be considered as an opportunity cost or opportunity cost. The opportunity cost is the opportunity cost can be divided into personal, financial and opportunity costs.

Personal Opportunity Costs
It is important in the private opportunity cost is the time that you use to carry out an activity you can not use for other activities. When you use it for study, work, or shopping you can not use for other activities. Allocation of time in daily life should be used to meet your needs, to achieve the goals you want to accomplish and create a personal satisfaction for you
     Private opportunity cost is not less important, namely health. Irregular eating patterns, often staying up late or do not like exercising will make you sick, and raised the cost of treatment and you can not do activities that are useful. Personal opportunity costs that require the attention of the personnel, skills, and knowledge.

Financial Opportunity Cost
Most of the decisions you make in life must have been related to finance. In financial decisions, the main thing to consider is the time value of money or the value of money over time, that can be interpreted simply means increasing the amount of money due to the amount of interest you earn
   Your decision to invest in debt or have to see the value of money over time charges. Credit card debt with interest rate of 3 percent per month or 36 percent a year, it would be better if the interest rate is the result of investments you make. Investments you make the investment instruments that give flowers or anything in return different results, will also give different results at the end of the investment period. Thus, ownership of investment products to achieve financial goals is an important thing you should do.


 

"Credit card debt with interest rate of 3 percent per month or 36 percent a year, it would be better if the flower is the result of an investment that you do"

Matters affecting the financial planning [Economic factors]

Economic factors
  Economic conditions continue to change also affects financial planning. forces of supply and demand have an important role in the formation of prices of goods needs. The inflation rate is high enough to make you have to adjust spending each year, as well as with the increase in wages or earned income.
  Bank that serves as the controller of monetary instruments having a bank certificate to be a reference to the interest rates on loans and deposits for banks. Real sector gets credit disbursement from the bank will adjust the price of its products in accordance with the amount of loans granted by the bank. You as a consumer end alias buyer indirectly impacted by the amount of lending rates.
  Making financial decisions, both for individuals and families, is strongly influenced by economic factors, such as inflation, per capita income, and interest rates. Let's discuss a little more detail the terms and the effect on your finances.

Inflation
  When interpreted in a simple, inflation is rising prices and services. Inflation effect on the decline in the value of the money we hold, as happened in the 70's that a certain sum of money you are able to have a motorcycle. Compare with current conditions, with the same money, you can only buy motorcycle tires with decent quality.
  For those of you who have a steady income each year without any increases, high inflation can erode the ability of money to spend. Usually many companies measure employee salary increases adjusted for inflation, it may be called by the rate of inflation, this can be referred to as cost Of Living Adjustment (COLA)
 Inflation is also a risk that is not visible to people that like to put the money in a vault rather than in investment instruments. Value for money will decline to spend the same goods in the next year. Inflation happens when averaged averaged since the 80s could reach 10 percent-a relatively high inflation could also be caused by stretching of development in various sectors. For those of you who are planning for the child's education fund, multiply two times the rate of inflation to increase in the cost of education is needed .

Income capita
  Income capita is used to measure the value of all goods and services produced by a national economy as well as to measure the economic health of a country widely. capita income is reported as a real form of economic growth .

  Simply put, capita income would show the average revenue per productive citizens (working age) based on macro-economic indicators. Rising capita income could reflect that more specific country or society, better off than the people of other countries.

 

Interest rate
The interest rate is the biggest factor that will be taken into consideration in making financial decisions, be it debt or investment decisions. For example, Housing Loan, Car Loan, as well as other business credit. The selection of the type of instruments used affect the returns received
    Interest rates affect your financial planning, the calculation of the future needs of diverse. Of course, also need tools such as the right investment instruments to help you with the aim of fulfilling the financial goals you want.

Cycle of life

 Understanding the personal lifecycle
Age 20 years

•  try to save 5 to 10 percent of gross income.
•  have an emergency fund of six months of the monthly fee.
•  start a credit history, it can be from a credit card, credit history is very important to do, especially in  developed countries like America.
•  purchase or repair homes. investing for growth not to long.
•  make pension savings.
• have adequate insurance.
•  making a will.

Age 30 years

• budget and expenses should be scrutinized more carefully.
•  include a broader tax planning
•  raise funds for savings / investment retirement
•  saving for children's education funds
•  start retirement planning
•  re-evaluate insurance needs
• will change according to the change in family status.

Age 40 Years

•  continued to provide funding for the education of children, it could be to finish college.
•  add personal savings.
•  continue with the add investment funds for retirement.
•  monitor the tax consequences on investment.
•  investment for the long term.
•  reviewing insurance requirements because the kids are out of the house.
•  reviewing homeowner's insurance.
•  legacy planning more seriously by using wills, transferring ownership of the property by way of gift, grant or even start making trusts.
  

Matters affecting the financial planning [ factor value of life ]

Factors personal life values ​​and life cycle
spend patterns among you who are still in their 20s and you are aged 50-'s certainly different. Personal factors, the number of dependents in the family, and lifestyle affect the way you spend your money and how to invest.
Habits in society have also changed, now many people think to be able to meet household needs. Values ​​of life that you apply to the family also affects the way your financial plan. In other words, the principle in life you can rely on to invest in products that conform to the trust. 
cycle of life
financial plan will change depending on the age and condition of some stage or stages in the life cycle of your personal financial planning, are as follows

1. unmarried adults. Planning focuses on having appropriate insurance savings and wealth accumulation, education for career development.
2. Newly married young couple. Planning involves calculations about when couples want to have children for larger families need more home course requires certain conditions to be able to get a home loan [mortgage]. the need for health insurance and life insurance will increase a wills and inheritance planning is essential and should be owned.
3. Planning new parents are more likely to prepare for the child's needs and providing education fund.
4. The parents were recently divorced one of the former couple's [usually the father] has the obligation to pay alimony to his ex-wife lives [alimony] and his son [child support] financial needs will increase as [the father's side] should provide for two families [new family if there is a liability to be divorced and even husbands and wives both work new family living expenses will continue to increase.
5.  Parents with children who are more mature. Estate planning will get the attention of the more important. Insurance program better and quite possibly needed better invested surplus funds. retired early to start planning
6.  children have moved out of the house. Parents may want to consider moving to a smaller residence or a place closer to the child. Planned retirement planning should be more serious.
7.  Entering future retirees. It is important to review the [revieu] insurance and annuity programs. Retirees will need income to make ends meet and other personal needs during retirement, such as travel or sightseeing.

Matters affecting the financial planning {1}

Matters affecting the financial planning
Many factors affect the achievement of your financial goals, ranging from age, number of dependents in the family, to the interest rate and inflation .. two things that affect your financial planning is a factor of the value of private life and economic factors.

[ factor value of life ]
[ economic factors  ]
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Instructions set financial goals

There is a saying if you do not know where you're going, you might end up somewhere else and not even know it or in other words the direction of your goals if you do not know want to get lost.
Setting financial goals is the foundation of the process of planning, implementing, and monitoring the progress of your financial planning.

 

 

 

 

 

The things that you can make the handle in setting financial goals are as follows:

1.  Realistic financial goals should be based on the amount of income and your living conditions.
    For example, is probably not a realistic thing to realize if you have plans to buy a car once a year for a new you and a new college graduate to get a job.
2. Specific and measurable, clearly know the amount of funds you need and how you get it.
   For example, you need 50 million for a down payment for a house payment in 3 years and now you can set aside each month of your expenses for stock mutual funds invest in XYZ company.
3. Target time, as in the previous example, that you have a target of three years to achieve. determination makes you a target date to assess the progress of each planning financial goals.
4. Actions to be taken, your financial goals is the basis of a series of other steps that you will do.
   For example, adverse or stop debt with a credit card so that you can invest or looking for a side job.

Purpose of Life

consciously or not, in fact every individual has a purpose in life.
even when you stepped out of the house, you must have a purpose even if it's only to the next stall.
definite purpose in life is different, which must be adapted to the environmental conditions, age, lifestyle, family size, and so on.
what will you do tomorrow? believe it or not, the decision is the result of thinking of a life goal.
Short-term goals are planning for a period of one year, such as holidays or to pay debts of the small, medium-term objective is to plan for a period of 2-3 years, such as replacing a vehicle or in school, and planning long-term goal is for a period of more than 5 years, such as retirement planning or preparing the children's education fund.
setting long-term goals should be tailored to the objectives to be achieved in the short-term stage is the basis for fulfilling the objectives to be achieved in the short and medium term stages.
For example, if you set a payment plan for the purpose of payment of house this year, it is a short-term goal in part the basis of long-term goals

Financial planning services

some reasons why you need the services of a financial planner, including the following;

1. The limited time
   you are a professional or a business owner who is very skilled in the art. Your focus is to provide the best in employment and their families so often forget the importance of planning for their family finances.
2. Conditions of the money market and capital market and investment trends are rapidly changing.
   Macroeconomic covering the financial problems such as inflation, changes in interest rates, which affect the public finances will also impact on changing investment trends
3. A growing number of financial and investment products
   the financial industry is a very dynamic industry. new financial products will continue to emerge to add to an existing product. study and analyze new products that continue to emerge might not be your doing., and that is, to be done by a financial planner: learn new products 
4.  Improve education
   Higher levels of education, making awareness to organize and manage your income and wealth increased in order to make the future better planned families. 

Because we live in the B to D.
B = birth and  D = death

We Need to Know

The need for financial planning
without planning an orderly, neat, and thorough, you will always be in bondage by financial problems. Have you ever noticed that your partner more than you paid debts of more? will, however, why there are workers out there who has a salary much lower than you only have a house and a car loan. let credit card debt, credit cards have not wrote.
However, how they lived without debt by such a small salary. their shopping within the scope of his abilities, while you spend beyond your ability and willingness to follow you. as long as you are not the financial plan, as long as it is you feel you do not have enough money and book your debt is never closed.

Pressure rate
Value of interest charged by the bank to make our purchase costs increased manifold when extended due date of payment.
Original price of the goods you buy up many times when you pay in installments 

Inflationary pressures
Is inflation is the purpose here? inflation is the inflation associated with the money you save under your pillow. not only the value of high interest, you also pressed and in the crush of the inflation is assumed that you had 1 million dollars stored neatly under a pillow at home. try to calculate the value after 10 years?
certainly surely value will diminish or shrink.

income protection
only god that did not require protection because He is mighty, all-powerful, no one can match his power. as a creature of God, we are not spared from the disaster. . What we can possibly do is to prepare a step and foundation to keep from falling, even as high as anything we want.
What happens with the future of your family if you lose your income, the loss of income, how do you feed the mother, child, and wife? how to pay home and car loans? besides who is going to pay the credit card's millions? that's what happens if you do not make a financial plan.

Education of children
First, the parents sell the property to pay for his son to study at university. Now, what would you sell to cover the cost of your child's learning at university? there is a house being occupied, but still have not paid off the loan installments. too much other debt. already burdened with student loans, the interest must be paid.
that causes young children now depressed. they are already burdened student loan even if not working. salaries in the first three years were spent to pay credit card debt should not be forgotten or passed from the due date. that's what happens if you do not plan your finances

Life after retirement
Life as a youth feels wonderful. when the children were little, dependents are not doing much and you do not suffer any pain. in short everything is under control. days turned into months, months turned into years. and finally the age of 55 years. no savings and you just hope the employee savings.
how do you identify and improve your weaknesses? the answer is a lot of reading books, newspapers, magazines, and browse the internet. You can also discuss this issue with colleagues. and more experienced people who can share their experiences.
Increase your knowledge of the financial now. Problems let bygones be bygones and future would be more complicated.
Come to the seminar or read financial books in order to increase knowledge related to the administration of finances. bear the cost of mistakes you do today is much more expensive than the cost of learning from others' mistakes 

Make your financial planning from now. Making arrangements flow of money in and out to help you face problems in the future.

Importance of Financial Planning

Importance of Financial Planning
Just to hear the words of financial planning, you are not interested because those words do not exist in your dictionary.
You also assume that financial planning is only those who have more money, that is rich. Opinion was apparently strayed far. everyone should plan their finances to live a life vagaries of trial.
With a plan to regulate the flow of money in and out, it can help you face the possibility of anything. by knowing your true financial potential, your consciousness can also be associated with any increase. consciousness that can make you not act without consideration.
Within a month, how many times you go shopping or spend money? How many times have you purchased goods? Do you know how much you spend each month? Do you know that you've shopped beyond your capabilities if paying by cash?
Do you have enough money to cover the educational needs of children up to the level of education of children up to the level of higher education? whether you are saving enough money to pay for your life after retirement? or, at that time, your credit is still not finished? then, with what you pay down debt? mandatory employee savings or pension from your office?
 No one with an interest in financial planning will be more interested in debt planning. it is human nature. currently too much debt and interest are not able to be paid, then they just think, why they could owe that much? when the phone rings and the court letter came, did they find a way out. usually they can solve the problem, but ultimately stuck with the debt back.

 "As long as you do not plan finances, as long as you feel that you do not have enough money and book your debt is never closed"

DOCTOR OF FINANCE

Seeing the task of a financial planning, it can be said that his job is to help clients to plan personal finances, by giving planning solutions, choose financial planning, wealth, or investment customers, so that customers' financial needs in the short term, medium, and the length can be achieved.
Choosing a financial planning with choosing a family doctor. Therefore, if you require the services of a financial plan to help manage the family finances, there are some things you can use as a handle to pick good financial planning, including trust, comfort, track record, the cost of compensation, work systems, education degrees.


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