Personal Financial Statement Analysis

With reference to (Gitman, Joehnk and Billingsley, 2016), personal financial planning is defined as a systematic process that considers the important elements of an individual’s financial affairs and is aimed at fulfilling his or her financial goals. In other words, personal financial planning expounded on the structured procedure of taking significant factors of a person’s finance into account so as to attain the particular results that person wants.

This methodical approach encompasses the following six steps known as establishing of personal financial goals, generating a variety of financial plans, executing of the financial plans, developing and implementing budgets, assessing the outcome through financial statements analysis and adopt

As presented, the different stages that an individual will go through are early childhood, high school and college, family formation, career development, pre-retirement and retirement. From early childhood to early adulthood, an individual has a propensity to seek financial support from his or her parents until an individual lands his or her first job. The visible improvement in an individual’s income stream occurs after he or she enters stable employment, starts a family and establishes a career. Therefore, it is inevitable that the short-term, intermediate and long-term financial goals of an individual differ throughout the distinct phases of

Thirdly, savings and investment planning comprises building of wealth by stashing money away for a rainy day and spending money on financial products until the end of an individual’s life. The examples of financial products are government bonds, corporate shares, preferred stocks, real estate investment trusts and others. Fourthly, employee benefit planning represents proper management of employee’s welfare in coordination with an individual’s emergency backup plan throughout his or her life. For instance, employee benefits like health, life together with disability insurance, pension plus profit sharing plans, 401(k) supplemental retirement program, child care, elder care along educational assistance programs, sick leave, annual leave, employee discounts, subsidized parking and so on. Fifthly, tax planning includes a meticulous observation of the existing and estimated revenue before initiating appropriate strategies to curtail taxes. Lastly, retirement and estate planning consists of a complete accumulation of an individual’s assets at the early stage of his or her life through high returns on investments together with savings for personal use and the successful transfer of such large reserve of wealth to his or her inheritor (Gitman, Joehnk and Billingsley,