Personal finance planning refers to a systematic manner through which an individual handles his/her finances. Personal finance planning involves the process of making funds available to cater for current and future needs. It involves financial decisions on spending, savings and investing from the available income.
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Purpose or importance of personal finance planning
- To cater for current and expected future expenditure without financial strain
- To secure your future and that of your family
- It helps to plan for unexpected events and emergencies like illness
- To plan for investment and retirement
- To ensure effective process of acquiring, using and protection of financial resources
- It helps to ensure effective control of financial obligations hence avoiding bankruptcy, over-dependence or excessive debt
- To acquire and enjoy a sense of financial freedom that will in return ensure that you attain your financial goals
According to the balance website, personal finance planning covers different areas including insurance, savings, retirement and so on. Understanding how these different areas relate will help you develop a sound financial plan for your family.
Main issues in personal finance planning
Cash flow management
Cash flow management involves the process of monitoring an individual cash inflows and cash outflows. Individual cash inflow is in the form of income from different activities while cash outflows refer to the expenses. Consequently, cash flow management tries to find out if the cash inflow is able to sustain the cash outflows.
Cash flow management indicates the financial position of an individual; it can either be a surplus or deficit cash flow. A surplus cash flow is desired; it indicates that the cash inflow is more than the cash outflows. On the other hand, a negative cash flow is an indication that the cash outflows are more than the cash inflows and calls for necessary adjustments either through income increase or reducing of expenses.
A risk is a future occurrence that you cannot predict at the moment. A risk leads to unfavorable state when it occurs or happens. Examples of personal risks include death, incapacity, property loss, emergencies and health among many others. A good financial planning should be used in order to cater for different personal risks when they occur. However, personal finance advisers advocate for separate insurance covers in order to safeguard and individual financial position in case of occurrence of a risk in future.
Investment planning/ financial planning
Investment planning entails the asset accumulation over a given period of time in order to make a huge purchase. Most common personal investment includes purchase of house, car and luxuries. Lifetime decisions like marriage can also be termed as an investment. It is important for an individual to seek professional help in order to make the right investment decision at the right time. An investment expert helps someone to come up with an investment portfolio that will have a higher value in the future. Investment planners consider the current market value and the rate of inflation in the economy before providing an investment portfolio advice.
Individual tax planning is an important aspect of individual personal finance planning. Tax planning helps an individual understand his/her tax obligation, tax reliefs and benefits of tax rebates. In addition to complying with the tax policies, one is in a position to make timely and adequate tax submissions. One is subject to different tax policies depending on the government and state policies. In most countries, tax is deducted depending on an individual level of salary or profits in case of business people.
Estate planning is the process of disposition of personal wealth to trustees in case of death. Personal finance planning is important towards ensuring ease of estate planning since the value of the property is already known. It avoids government involvement in the liquidation and valuation of property which results in addition expenses.
The need for personal finance planning assignment help
In most cases, students approach personal finance planning questions from a personal view hence disregarding the professional aspect. Personal finance planning assignment help will help in providing quality, original and well researched professional approach to students. Our assistance will provide a detailed and comprehensive analysis of different issues pertaining to personal finance planning.