Personal Financial Planning

Personal finance covers a wide range of monetary components. Understanding how they work together is crucial to generate wealth and implement a feasible investment strategy.

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Financial planning consists of evaluating your personal needs and goals, and then, executing a plan to secure your financial future. It defines and analyses personal assets and liabilities such as cash, checking and savings accounts, credit cards, loans, mortgages, insurance policies, estate, investments, retirement plans, and tax management. It also evaluates your personal income and expenses in a dynamic process that consists of six key basic steps.

Six Steps to Financial Planning

1. Definition – List the value of your personal assets and liabilities along with your personal income and expenses.
2. Analysis – Evaluate your situation to identify opportunities and threats associated to your financial resources.
3. Goal Setting – Outline specific and measurable short and long term objectives according your financial obligations and aspirations.
4. Planning – Draw a guideline that should result in the achievement of these financial goals. It normally covers the following areas:
   1. Investment Planning
   2. Risk Management and Insurance Planning
   3. Tax Planning
   4. Estate Planning
   5. Cash Flow and Liability Management
   6. Education Planning
   7. Retirement Planning
   8. Business Succession Planning (for business owners)
5. Execution – Implement the strategy by managing the resources set aside to achieve your financial goals.
6. Monitoring & Re-evaluation – Follow up periodically on the progress to determine if the resources and the environment are conditioned to meet your financial goals and adjust them to a more realistic level.

Depending on the complexities entailed in your financial planning, you can organize your money through personal finance software and/or professional advice.

Both options can provide you with a great overview when planning your financial future by giving you a clear breakdown of where your money has been, where it is and where it’s going.

Personal Finance Software

The consumer need for personal finance software is gradually changing due to a new range of options provided by the banks, brokerage firms and Web sites that help you manage your finances. Nevertheless, personal finance software is still the best tool to manage your finances. In order to choose the right personal finance software, you should take into account the following criteria:

1. User Friendly – How easy it is to install and use
2. Banking and Bills – Quality of the features of online banking
3. Personal Investing – Only useful for Investors
4. Financial Planning – It’s the tool that puts your plans in action
5. Tax Options – It’s a tax calculator that helps you optimize it
6. Reporting – The feature that to summarizes your finances

2009 Personal Finance Software Review

Personal Finance News & Videos

News and videos on financial planning, savings, ISAs, taxes, retirement, inheritance, credit cards, loans, mortgages, endowments, insurance and more.