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  • Created by: em_har
  • Created on: 15-02-16 19:49
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  • Topic 5
    • Featurs of effective financial planning
      • the goal you set yourself must be realistic within the context of your income and expenditure
      • Must be clear about how much your aspiration will cost you and how long you will need to save for
      • time scales need to be applied to a budget
      • you need to be flexible. Therefore able to make changes to your plan if affected by an unexpected events
      • Your financial plan must be documented to be able to monitor its progress
    • Using financial products to meet financial goals
      • Saving
        • putting away a certain amount of money every month until the amount you need is achieved. Have to consider price rises against interest rates
      • Borrowing
        • getting yourself into debt to achieve your aspiration immediately. However will have to repay more than you borrowed due to interest
      • insurance
        • Life assurance and pension funds help achieve aspirations and covers the risk of not being able to pay back the money
    • Consequences of failing to carry out financial planning
      • less likely to be able to achieve wants and aspirations
      • could go into debt by not checking up on your money
      • could get a bad credit score meaning its harder to borrow in the future or may be refused.
      • if you're old and go into debt you don't have long to earn money back and will have to rely on your pension
    • The events people plan for depend on many factors
      • their family sitiation
      • their financial situation
      • current lifestyle
      • their personality / attitudes to risk


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