finance
- 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
- Saving
- 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
- Featurs of effective financial planning
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