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

The Financial Planning Process

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Step 1 in the

Financial Planning Process

DETERMINE YOUR CURRENT FINANCIAL SITUATION.

Evaluate income, savings, living expenses, and debts.

Prepare a list of current asset and debt balances and amounts spent for various items.

Match financial goals to current income and

potential earning power.

• More to come on this in Chapter 3.

Step 2 in the

Financial Planning Process

DEVELOP FINANCIAL GOALS.

• Identify feelings about money and the reasons for those

feelings.

• Determine the source of your feelings about money (facts or influence of others).
• Determine the basis of your financial priorities (social pressures, household needs, or desires).
• Decide on specific financial goals to pursue for your

situation.