What Is The First Step In Financial Planning Quizlet?

What are the 6 steps in the planning process?

The six steps are:Step 1 – Identifying problems and opportunities.Step 2 – Inventorying and forecasting conditions.Step 3 – Formulating alternative plans.Step 4 – Evaluating alternative plans.Step 5 – Comparing alternative plans.Step 6 – Selecting a plan..

What is a financial plan called?

A financial plan is sometimes referred to as an investment plan, but in personal finance a financial plan can focus on other specific areas such as risk management, estates, college, or retirement.

How do you determine your current financial situation?

5 Simple Steps To Evaluate Your Financial HealthDetermine your net worth, and see which way it’s trending.Calculate your debt-to-income ratio (and try not to scream)Evaluate your housing situation.Find out where your money is going (and if you’re spending more than you should)Make sure your investment strategy is aligned with your situation.More items…•

What are the basic components of a financial plan?

The main elements of a financial plan include a retirement strategy, a risk management plan, a long-term investment plan, a tax reduction strategy, and an estate plan.

Why is a financial plan important?

Financial planning helps you determine your short and long-term financial goals and create a balanced plan to meet those goals. … Tax planning, prudent spending and careful budgeting will help you keep more of your hard earned cash. Capital: An increase in cash flow, can lead to an increase in capital.

What is a financial action plan?

A financial action plan is a plan that directs how you will manage your money in order to make progress toward your goals. Simply knowing what you want will not get you there: you need a real plan to make it happen. And it should be written down, with clear goals and actionable steps that can be measured in some way.

What is the first step in financial planning?

Establish goals and define client-planner relationship: The first step to financial planning is establishing goals and defining the client-planner relationship. This lays the foundation for the financial planning process and provides clarity about the client’s financial destination.

What are the steps involved in financial planning?

5 steps to financial planning successStep 1 – Defining and agreeing your financial objectives and goals. … Step 2 – Gathering your financial and personal information. … Step 3 – Analysing your financial and personal information. … Step 4 – Development and presentation of the financial plan. … Step 5 – Implementation and review of the financial plan.

What is the most important step in financial planning?

Monitoring Your Financial Progress. Regular communication and follow-up are important steps in the financial planning process. In fact, creating the plan is really just the first step. You’ll have ongoing contact with your planner to find out whether you are on track to meet your financial goals.

What is the six step financial planning process?

The financial planning process is a logical, six-step procedure: (1) determining your current financial situation. (2) developing financial goals. (3) identifying alternative courses of action.

What are the 5 financial life stages?

Understanding the 5 Financial Stages of LifeStage 1: Entering the Workforce – Early Career Years. If you are still on this stage and you are reading this blog post, congratulations! … Stage 2: Family and Career Building Years. … Stage 3: The Pre-Retirement Years. … Stage 4: Early Retirement Years. … Stage 5: Later Retirement Years. … FINAL THOUGHTS.

What are the steps involved in the financial planning process quizlet?

Terms in this set (6)step 1: determine your current financial situation. … step 2: develop your financial goals. … step 3: Identify Alternative Courses of Action. … step 4: evaluate your alternatives. … step 5: create and use your financial plan of action. … step 6: review and revise plan.

What is a financial process?

Financial processes refer to the methods and procedures completed by the Office of Finance. They include, but aren’t limited to: Data collection. Budgeting. … Financial close.