Topic 4 - Monitoring and Adapting Personal Financial Plans Flashcards
what should personal financial plans reflect and consider
need to reflect own personality and situation, considering life cycle and life events
need to take into account financial objectives
what 8 things should be considered for work-life balance
financial stability and security job satisfaction and career development hours of work and rate of pay levels or responsibility family and friends relationships personal development and growth life experience and adventure health and well being
before creating a financial plan, what does a person need to know
needs wants priorities attitudes aspirations
what characteristics should be considered for attitudes to financial planning
these should then be applied to level of income and expenditure
main needs and wants attitude to spending attitude to saving attitude to debt aspirations attitude to risk
list the 5 steps involved in drawing up a budget
identify all sources of income identify all items of expenditure decide on the time period fill in all figures for cash flow chart calculate the balance
why must financial plans be monitored
to see how accurately forecasts match real life, the difference is called budget variance
what is the simplest method of monitoring plans
keeping receipts of purchases and using bank statements to keep a record - can be done using spreadsheets
what are the 3 free online planning services
money advice service budget planner
money dashboard
money saving expert budget planner
what are the 3 paid for online planning services
you need a budget
money dance
goodbudget
what are the 3 types of people about planning
organised
less organised
no forward planning
what are the two traditional types of budgeting
envelope budgeting (average monthly payment in each envelope any surplus is spent or saved) and zero based budgeting (allocate every penny of income to be spent purposely and wisely, cost of irregular bills and big ticket items split up over months and small amounts set aside each month)
what is the problem with zero based budgeting
only coves enough for regular bills, doesn’t consider unexpected payments
what is the advantage of zero based budgeting
makes you consider the opportunity cost as become aware of all expenditures
effective in anvil plans which interlock over all time periods mean that…
they will be sufficiently flexible to accommodate for changing future needs, wants and aspirations
what does the length of each time frame depend on (as there are no standard definitions)
depend on personal circumstances and the perspective of the individual
