FINANCE MID TERM REVIEW The financial planning process Identify alternative courses of action 1 Determine current financial situation 2 Develop financial goals 3 4 Evaluate alternatives 5 Create and implement your financial action plan 6 Review and revise the financial plan Influences on personal financial planning 1 Life situation and personal values 2 Consumer prices 3 Consumer spending 4 Interest rates Components of financial planning 1 Obtaining 2 Planning 3 Saving 4 Borrowing 5 Spending 6 Managing risk Investing 7 Economic forces that influence jobs Interest rates Inflation 1 2 3 Consumer demand After tax benefits x 1 tax rate Pre tax benefit 1 tax rate Balance sheet assets liabilities net worth Income statement revenues or income minus expenses net income or loss which either increases or decreases net worth Cash flow statement reflects cash flow generated less cash used for or from investments and cash used for or from financing This statement reconciles beginning and ending cash balances Insolvency the inability to pay debt lack of financial resources Money market fund a savings investment plan offered by investment companies Money market account A savings account that requires a minimum balance and has earnings based on market interest rates I PxRxT