Quick Answer: What Are The Steps Involved In The Financial Planning Process Quizlet?

What are the steps involved in the 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.(4) evaluating alternatives.(5) creating and implementing a financial action plan, and.(6) reevaluating and revising the plan..

What are the six steps in developing a financial plan 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 are the elements of a good 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.

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.

How can you assess your financial situation accurately?

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 six steps you can take to control your finances?

Six steps to gaining financial controlStep 1: Organizing family records.Step 2: Develop a spending plan.Step 3: Determine your net worth.Step 4: Are you ready to take on new debt?Step 5: Manage your spending.Step 6: Summarize your current financial situation.

What is the purpose of a financial plan quizlet?

specifies your personal goals and details the activities to achieve those goals. It includes analyzing your income, expenses, liabilities, and savings.

What is the correct order of steps to making effective financial decisions?

Step 1: Identify the decision. You realize that you need to make a decision. … Step 2: Gather relevant information. … Step 3: Identify the alternatives. … Step 4: Weigh the evidence. … Step 5: Choose among alternatives. … Step 6: Take action. … Step 7: Review your decision & its consequences.

What is step 4 of the steps for effective investment planning?

The key word in Step 4 is “develop.” Financial planning requires devising alternative solutions that are achievable for each individual. With so many different variables to consider, your plan needs to develop, which means to evolve with your needs but remain within your capabilities and risk tolerance.

What are the 5 components of a financial plan?

Essential Components to a Financial PlanGoals & Objectives: Goals and objectives should be listed by priority and should be as specific as possible. … Income Tax Planning: … Balance Sheet: … Issues & Problems: … Risk Management and Insurance: … Retirement, Education, and Special Needs: … Cash Flow Statement: … Investment Planning:More items…

What is the personal financial planning process?

The Personal Financial Planning Process Identifies Financial Goals and Objectives And Creates A Plan For Achieving Them. The financial planning process is very individual and personal. … Personal financial planning can help you construct the foundation on which to build a secure financial future.

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 developing a financial plan quizlet?

The first step of financial planning is to determine your current financial status. A new car is an example of a need. Saving money for the holidays is an example of a long-term goal.

What are the five fundamental steps in the financial planning process?

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.