Making a Financial Plan

Steps for your future

7 Comonents of a Personal Finance

1. Budgeting and Taxes

a. The important features of budgeting are:

i. Establishing your net worth

ii. Establishing your income

iii. Identifying your expenses

iv. Considering the impart of taxes

2. A Plan for Managing Your Liquidity

a. It’s important to know what have at hand (cash) for immediate wants and needs.

b. There’s two components that affect this:

i. Money Management

ii. Credit Management

3. A Plan for Your Financing

a. It’s important because you might need to borrow money to buy something you might need, so you have to plan to pay it off. You might lose your stuff if you don’t pay in time.

4. A plan for managing your risks.

a. It’s important because if you don’t know how to handle a risk you could lose everything. a good way to get rid of this risk is to insure your assets.

5. A plan for your investing.

a. It’s important because you need to know how to handle your funds to meet daily expenses. I f you spend too much you might end up in bankruptcy, but if you moderately spend you can use leftover fund and invest them to increase your budget.

6. A Plan for Retirement

a. It’s important to set a retirement plan and stick to at a young age so you don’t have to put out a lot of money regularly to start a retirement whenever you’re older.

7. A Plan for Communicating and Keeping Records

a. It’s important to communicate your financial standings, for say your family, because sometimes you can learn from them. Keeping good records helps you when filing taxes and when calculating your net worth.