Components of a Financial Plan
Expresses the importance of communication and keeping records within your financial plan.
What is component four?
The price you pay to borrow money or the return earned on savings investments.
What is interest?
setting short term and long term goals and how much you need to achieve them
What are setting goals?
Discusses common types of investments, including stocks, bonds, mutual funds, and real estate.
What is component five?
The process of forecasting future expenses and income/allowing or providing a particular amount of money
What is budget?
listing your income and expenses to understand your spending habits
what is creating a budget
Discusses retirement planning, which involves determining how much to save for retirement every year and how to invest that money.
What is component six?
How much readily available cash you have on hand to meet immediate wants and needs.
What is liquidity?
a strategy for long-term saving, investing, and finally withdrawing money you accumulate to achieve a financially comfortable future life.
what is planning for retirement
Includes four steps of budget and tax planning (Determining Net Worth, Establishing your Income, Identifying your Expenses, Considering Impact of Taxes)
What is component one?
The total money earned by a business or individual before subtracting any costs or expenses
understanding your current situation and considering other road maps.
what is determining financial needs
Introduces Insurance planning as a component of your financial plan that determines the types and amounts of insurance you need
What is component four?
The value of all the assets a person or corporation owns minus liabilities. (asset - liability = ______)
What is net worth?
your cash inflows and outlays, your general income, and your balance sheet. Goes along with budgeting
Financial Projection