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Personal Financing Planning: Key Aspects Essay

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Updated: Apr 24th, 2022

My decision to practice Personal Financing Planning was influenced by the life of my uncle. Despite working as a security guard in a city hotel earning very little salary, he accorded his family a decent life, owned a modest house and paid for his children’s education. In the contrary, my father who worked for an established international manufacturing company had little to show for the $ 70,000 he earned as a manager. This case opened my eyes and made me realize the importance of Personal Financing Planning. Since then, my desire to learn and practice sound personal financing has grown tremendously. Interestingly, I realized from friends and people I interacted with that the culture of personal financing is lacking. This I attributed to lack of information on the importance of personal financing planning. A part from addressing the sources of family or individual’s funds, Personal Financing Planning helps in budgeting and establishing the amount to save (Harrison 23). It further takes into account future life events and unexpected financial risks. Personal Financing Planning requires not only basic education but also discipline. Even though education, especially accounting information knowledge, is important in Personal Financing Planning, self-discipline counts more. Self-discipline enables an individual to save to accomplish his plans. Education on the other hand, is only useful in forecasting. Nevertheless, of what importance is it if you can use accounting knowledge to predict financial situation in a country, but have no discipline to save money and invest? Personal Financing Planning controls all aspects of individual or family finances (Harrison 64). Decisions such as investment in the stock market, taking of insurance policies, social security plans, retirement plans, taking of personal loans, income tax consideration, checking, and credit card control are made in Personal Financing Planning. Without a sound financing planning process, personal financing is doomed (Rattiner 102).

The financial planning process involves five main steps. First, an individual must carry out an assessment. The use of balance sheets, which shows an individual’s assets and liabilities, and a personal statement which lists an individual’s expenses and income, provide crucial information on possible financing and savings margin. Secondly, an individual must set his goals, as this will help in direct financing. The goals must be specific and realistic and could be long or short term. However, setting of multiple goals is still acceptable. Thirdly, an individual creates a plan to help accomplish set goals. The plan is helpful as it could create avenues for investing extra income or suggest ways of cutting expenses in its implementation. Financing execution is the next step. It is in execution where discipline is a great asset. However, if an individual cannot execute his or her plan, involving an investment adviser is necessary. Lastly, monitoring and reassessment is required. This enables the individual to assess and know if there are adjustments required or if the plan is working well. The key areas of personal financing include an individual’s financial position establishment, protection from unforeseen risks such as inflation and loss of income , taxation planning, investments and accumulation goals assessment, retirement planning, and estate planning which is planning on how your assets will be disposed of when you die. In summary, I believe personal financing planning is a very important activity for every individual who aims to be successful. It is a way of forecasting which enables individuals to plan for the future of their families even after their death. Even though personal financing planning career has gained prominence over the years, few people practice personal financing planning.

Works Cited

Harrison, Debbie. Personal financial planning: theory and practice. London: Financial Times Prentice Hall, 2005. Print.

Rattiner, Jeffrey H. Personal Financial Planning for Divorce. New York: John Wiley and Sons, 2009. Print.

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