Financial Planning Process

The financial planning process is the way by which strategies are being developed in order to help people take control of their financial affairs in order to accomplish life objectives and according to Siegal and Yacht (2009) the financial planning process is the repetitive process that clarifies goals, measures the present condition, identifies and assess alternatives, select, estimate the resulting circumstance and reassess and revise the plan. (p. 18)

The elements of a good financial plan should include Specific, Measurable, Attainable, Realistic and Timely (S.M.A.R.T.) goals, knowing the current financial position by budgeting (assets and debt and income and expenses) and seeking professional help when making investment choices. It is

For example, I am married with two children; I have an aged grandmother, mother and father in-law that we need to send money to every two months for their upkeep. I also have loans to settle; this is a huge responsibility that has increased my income needs and my desires for more financial security, so that the well-being of my partner and dependents can be secured.

Health: People always say that health is wealth. Without good health I will not be able to factor in my dependent into my financial responsibility. Therefore, it is paramount to include protection against short term event (pregnancy, birth) and the risk of unforeseen circumstances (persistent illness, accident, long-term disability) in the personal financial

That is, when the GDP is high, it indicates that there is an expansion or otherwise a contraction, which could last for six months (recession) or prolonged (depression). As a result, the business cycles need to be closely monitored in order for the economy to provide for the need of its members.

Employment and unemployment rate: the economy produces more than goods and services to its members; they also provide employment, where people can earn wages as they trade their labor. In a situation where there is more jobs and fewer workers, the wages will rise and cost of living too will increase; whereas, when there are more workers and fewer jobs, wages will be low or lead to unemployment. Therefore, a productive labor market will provide employment opportunities and satisfy their consumer’s needs.

Value currency: this is based on its usefulness as it is used as a medium of exchange. This means that, the value of a currency totally rely on its purchasing power (what it can buy at a particular point in time.) When the purchasing power diminishes, it clearly indicates that there is inflation, which is measured by consumer price index (little can be bought with the unit of currency as a result of rising prices) but when there is high purchasing power, the economy is experiencing a time of deflation (currency is worth more and more can be bought as a result of falling prices)