The purpose of establishing a financial plan is to allow us to achieve our financial goals. Developing a financial plan not only will guide us to control our financial situation and also accumulate wealth and help us to improve or maintain our standard of living. In fact, most people feel that hire a professional financial planner to form a financial plan is more professional. However, in my viewpoint established the financial plan by yourself is even more meaningful. Now let us discuss how to effectively apply the six-part process to develop a robust financial plan.
Step 1 develop your financial goal
Before developing the financial goal, we required taking an honest and detailed assessment to determine your current financial situation,
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The planner should remember opportunity costs will always involve when making a decision. For example, when you decide to invest in a high-risk stock, you must know that you cannot assume the risk as low as the bond market. In other words, if you choose to assume the low-risk investment, the low return you earned, this is called opportunity cost. At the same time, the uncertainty will exist forever in your financial plan. Even if you have fully planned your financial plan, still possible face some factors that you cannot predict like when economic decline causes planner decides to reduce the number of investment in order to deduct their …show more content…
Despite the fact that the plan is perfect, but still have some fact unavoidable; life happens. For this reason, it is a must to review your financial plan regularly. When any variable occurs, you will be able to adjust your plan as often as needed. For example, your goals may change. Currently, planner set the specific goal is having a house but due to the discouraged by the current financial condition and led to a temporary disappearance from the list of priorities and planner should reset new goals and your financial plan has to be reorganized in order to guide your current aims. We can say that when your life will change and your financial plan will change as well. So planners must be aware that the original strategy may not have the expected results and may need to be adjusted to help you meet your demand goals. If the planner is a life circumstance change quickly such as a student, he or she may choose to review these goals every six months. In contrast, if the planner's life tends to be more stable such as retirees may choose to review once a year. All the planner must be faithful in reevaluating their plan from time to time to ensure your goals haven’t
The Accounting Principles II portfolio project helped me become familiar with accounting practices used to complete routine financial tasks. This course helped me learn how to complete routine business transactions, discover and explain financial issues in companies and create and manage ledgers for employers. The Accounting Principles II portfolio project taught me how to manage companies’ journals, income statements, cash flow statements and closing statements in ledgers. The Bryant Stratton Online college program outcomes helped me learn about merchandising laws, rules and approaches used in corporations. These outcomes helped me learn and distinguish practices used to create, track and manage product inventories when I am completing tasks
There may have some short term goal and long term goals depending on the time frame we set out. Setting a financial goal should be serious and a realistic goals because we could fall out with every goals if we have no outstanding set of goal. For example; I want to become a network security but I have no financial support or set of goal, I would not make my dream to come true. The finance follows everything that we do in order to success. Without a financial goal, it is like climbing on a tree without ladder. During my short term goal, I decided to save money as much as I could to support for myself. I also could get help from my families but I do not want to rely on them. I only accept their support for activities such as taking vacations. I decided to save money for my college and retirement plan by myself since I could able to work on full-time or part-time jobs. Financial goal also require prioritizing times and managing skills. As for myself, I need to know where the money come from and where it going in order to track my financial goal. I have to decide which is important or urgent, do I want or needed. I would not care if something that I do not seriously need for anything that doesn’t relate to my goal. I always have to figure out an accurate amount of money I spend and talk to my family if I need help. I could also go and talk to the Donnelly Financial Aid Advisor to let me know how my financial aid will reflect on the classes that I would take. I also set my retirement plan as a long-term goal, so I am going to start before reaching my short term goal by little as little. I believe I would be able to save money for retirement of the next fifty years if I save day to day or month to month
The Pro-Forma Financial Statements, as can be seen in Appendix F, show the results of the alternative strategy for IBM as compared to the company remaining on their current course of business. One of the important moves for IBM under the new strategy is to bring new leadership into the company. Their current CEO, Rometty, has a hefty salary, and also stock options that are potentially worth more than her salary according to Melin (2017). Stock options is a common way companies can add compensation, without adding to the bottom line because of the way they are valued. While this method is within acceptable standards according to GAAP, Rometty’s issuance of options, and the way the board compensation committee used a variety of methods for their valuation has raised many eyebrows, especially after years of poor performance by the company (Melin, 2017). In the alternative strategy for IBM, Rometty would be relieved of her post as CEO at IBM. What can be viewed through the Pro-Forma Financials after taking this action in 2017, is that IBM will experience savings in their Selling and Administrative Expense as her successor would not come in at the excessive salary that she was collecting. According to Merlin (2017), Rometty’s
When Storm’s founder likened his model of financial planning to that of a Big Mac or a Ford production line, I think that he was referring to the quality of the products on offer. He is comparing his model of financial planning to the fact that people pay money for poor quality food and poor quality cars, just as they pay money for poor quality financial planning through Storm Financial. The Storm advisers breached their AFSL obligations because did not get to know their client. They offered the same advice to each of the clients, which resulted in great losses because they did not look at the needs of each individual client.
A crucial reason in favour of mental accounting and overconfidence is decision efficiency. Real-life investing scenario changes every moment Time-consuming and systematic thinking process seldom is allowed during the intense decision-making (Stewart Jr et al., 1999, Busenitz and Barney, 1997). Additionally, the ‘small world’ used by the economic theory, which only applied to strict condition, is not necessarily applicable in the practical investment decision. As the assumption in those analysis approach may not conform with real life well and for most of times, cognitive heuristics is more suitable for the uncertainty(Gigerenzer and Gaissmaier, 2011). However, there is also a few argument against them, for it may hinder people from examining their investment choice thoroughly. Research shows that they did not perceive themselves as risk taker, but in fact, they are more likely to take relatively low return alternatives as ‘opportunities’, indicating that they are risk-taking to a great extent(Palich and Ray Bagby, 1995). As a result of the illusion created by such factors, decision makers tend to be narrow-minded in composing strategies and unable to bring enough information into thought(Schwenk, 1988). It was demonstrated by several researches that decisions made by means of biases and heuristics impose
The reason that even the best financial plans fail is because your job may change at no fault of yours, your family member may suddenly develop a life changing health problem, your family may suddenly be forced to relocate to a new place in search of employment and other unpredictable circumstances which subjects your family under a state of immense financial chaos and mental stress may creep in. The best principle of financial planning is to save a small portion of the amount you receive during each pay period of yours. Remember, as you age, you slowly tend to realize that you aren’t able to work at your income level you currently enjoy. Certainly, you can do your purpose a world of good by developing a budget which forces you to save a bit every month. If, in case, you receive a monetary gift or incentive in appreciation of your hard work, do not spend the entire amount.
Sales and operations planning (S&OP) is a process to help give better customer service, lower inventory, shorten customer lead times, stabilize production rates, and give top management a handle on the business. S&OP process is built on teamwork between sales, operations, finance, and product development. It is designed to help a company get demand and supply in balance and to keep them in balance over time. Balancing supply and demand is essential to running a business well. Some companies described S&OP as aggregate planning process.
Financial planning process can be defined as the ability to properly outline goals and assess the possibility of implementing those goals. In other words, it is a projection of where one intends to be and understanding how to arrive at that financial destination. Financial planning process requires flexibility because of the changing nature of our economic environment; therefore, even in defining our goals, a careful attention should be given to identifying and evaluating new choices so that when changes occur, our financial plans can move along with those changes.
Developing a thorough financial plan is a process that comprises a comprehensive analysis of a particular individual’s financial position and their long-term commitment to apply and observe the set financial plan through one’s life. The plan includes but not limited to, how an individual spends, saves monies and invests his or her financial assets. It encompasses knowing how to budget, manage cash and taxes, borrowing of funds, the use of credit cards, minimizing risk, investing and planning for retirement. Such a plan also requires a vigilant thought process for the future so he/she can tweak their financial plans as needed due to changes in lifestyle and economy.
In composition, process analysis is a method of paragraph or written opinion development by which a writer explains step by step how something is done or how to do something. An information-giving process analysis is usually written in the third-person point of view; an order process analysis is usually written in the second person. In both forms, the steps are usually organized in time-based order that is, the order in which the steps are carried out. Planning a good process analysis demands the writer to include all the extremely important steps. Be sure you have all the tools or ingredients needed.
Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget. Creating a budget allows you to decide in advance whether you will have enough money to do the things you need to do or would like to do. If you don't have enough money to do everything you would like to do, then you can use a planning process to prioritize your spending and focus your money on the things that are most important within your own life. This planning process will help to decide what you need to pay for and what you would like to do with the extra.
According to Miliken (1987), uncertainty, a major issue managers face during the strategic decision making process, can be defined as an individual’s lack of ability to predict future events. Managers frequently encounter
Personal financial planning is important because it helps you prepare financially for the future. My first short-term financial goal is to have an 8-month emergency savings account. This class helped me understand the important steps needed to achieve my financial goals. “Successful financial planning requires specific goals combined with spending, saving, investing, and borrowing strategies based on your personal situation and various social and economic factors, especially inflation and interest rates” (Kapoor, Dlabay & Hughes, 2012). First I evaluated my spending habits. This allowed me to see where I was
Moreover, financial management and practices play critical roles in the financial success of a business or of any individual. Therefore, any person or organization should consider financial management a key component of the general management of one’s future life (Benjamin. 2005).
Business plans are documents used for planning out specific details about your business.Business plans have importance and purpose for the success of the business however.Here are a few of the importance and main purpose of why we need a business plan in order to start a business. Business plan will guide us as an entrepreneur in how to handle and manage our business and company. It very useful in clarify direction , future vision , attract financing , attract team members and last but not least is to manage company.Moreover , the information gathered regarding the project is used in the Business Plan to predict viability , forecast success and propose strategies for the project .