Lo1-1: Analyze the process for making personal financial decisions. What is Personal Financial Planning?

Step 3 in the

Financial Planning Process

IDENTIFY ALTERNATIVE COURSES OF ACTION.

• Common courses of action include:
• Continue the same course of action.
• Expand the current situation.
• Change the current situation.
• Take a new course of action.

• Creativity in decision making is vital for effective

choices.

• Electing to “do nothing” can be a dangerous alternative.

Step 4 in the

Financial Planning Process 1

EVALUATE YOUR ALTERNATIVES.

• CONSEQUENCES OF CHOICES.
• Opportunity cost: What you give up by making a choice.

• The cost, or trade-off of a decision, cannot always be measured

in dollars.

• May refer to the value of money or time that you give up.
• Decision-making will be an ongoing part of one’s life.
• Consider the lost opportunities that will result from each decision.