Even for individuals with steady earnings, financial planning is a difficult task. When an individual must budget for a lifetime of spending while only earning for a short period, the task becomes more difficult. Given the disparity between the length of productive years and the length of years spent only on spending, financial planning is critical. For such people, the money they earn must be put to work in such a way that it will support them for the rest of their lives. Making informed judgments requires clarity on long-term financial goals. Effective personal financial management will enable you to successfully address life’s financial problems, responsibilities, and opportunities.
The Financial Planning Process will help you to determine your current financial situation, develop your financial goals, identify alternative courses of action, evaluate your alternatives, create and implement your financial action plan, and review and revise your financial plan. The majority of people have financial goals in their lifetime: to increase income and wealth, consume cost-effectively, find happiness in life, achieve financial stability, and amass wealth for retirement and a secure future.
Steps are required for successful personal financial management:
- Financial planning
- Cash and credit management
- Expense management
- Asset and income protection
- Investment planning
- Retirement and estate planning