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

Step 4 in the

Financial Planning Process 2

EVALUATE YOUR ALTERNATIVES.

• EVALUATING RISK.
• Uncertainty is a part of every decision.
• Consider inflation risk, interest rate risk, income risk, personal risk, and liquidity risk.
• FINANCIAL PLANNING INFORMATION SOURCES.
• To minimize risk, gather relevant information from print media sources, financial institutions, and financial specialists.

Exhibit 1-2: Types of Risk

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Step 5 in the

Financial Planning Process

CREATE AND IMPLEMENT YOUR FINANCIAL ACTION PLAN.

• Develop an action plan that identifies ways to achieve financial goals.
• Possible action plans can be increasing savings, reducing spending, increasing income by working extra hours, or making provisions for taxes.
• To implement action plans you may need assistance from others.