Personal Finance Management Free Essays

Source : http://www. theborneopost. com/2011/05/03/personal-financial-planning-improves-standard-of-living/ Personal financial planning improves standard of living Posted on May 3, 2011, Tuesday â€Å"Personal financial planning is essential if we want to improve our standard of living, minimise the likelihood of financial disasters,   invest optimally, and accumulate sufficient wealth over time,† said   Professors of finance, Dr Koh Seng Kee and Dr Fong Wai Mun in their book, â€Å"Personal Financial Planning. We will write a custom essay sample on Personal Finance Management or any similar topic only for you Order Now   Primary goal of financial planning In this personal finance textbook for Singapore’s undergraduates and MBA students, it also says that the primary goal of financial planning was to help a person to achieve better financial outcomes for oneself and his/her loved ones. Moreover, personal financial planning provided the twin benefits of helping a person accumulate wealth for the future; as well as reducing the likelihood that one will be adversely affected by major financial disasters. In another good book, ‘A Singapore guide to personal financial planning’ edited by Andy Ong, CFP, it stated that developing strategies to improve a person’s standard of living becomes increasingly difficult as the world becomes more complex. Though this statement was made in 1999 when this book was first published, it is still true today, and this also applies to Malaysians today as the Malaysian economy is also influenced by increasingly complex domestic and international factors. Thus being able to anticipate what we hope to achieve financially, give Malaysians an upper hand and higher probability of success compared with just reacting to financial happenings as they unfold. Good examples of major financial events that happened were the financial tsunami of 2008 as well as the Asian Financial Crisis in 1997 that still linger in the mind of many Malaysians. What is personal financial planning? I have been researching for a good and holistic definition of personal financial planning. I found a good one as defined by a few finance professors from Hong Kong. According to â€Å" Financial Planning and Wealth Management, An International Perspective† by Louis Cheng, Leung Tak Yan and Wong Yiu Hing,   personal financial planning can be defined as a comprehensive process which evaluates all aspects of a client’s financial needs including consumption, taxation, insurance, investment, retirement and estate planning in an integrated six-step approach in order to achieve a client’s financial goals. The six-step, as introduced by Certified Financial Planner Board of Standards Inc include: Establishing client-planner relationship; gathering client data and determining goals; analysing the client’s financial status; developing and presenting the financial plan; implementing the plan; and monitoring the financial plan   The benefits of financial planning: According to www. cfp. net, the benefits of financial planning include: Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track. Conclusion Andy Ong, CFP, Past President of Financial Planning Association of Singapore ( FPAS ) sums it up well: â€Å" Not only does sound planning improve one’s standard of living, it also helps to stretch one’s purchasing power and accumulate wealth in the most effective manner. The essence of financial planning is thus to provide a person with a perspective of what to do with one’s money in order to attain one’s financial goals. † Contact Lee Khee Chuan, CFP on your personal financial planning at columnists@theborneopost. com. He will 100 per cent tailor-make a financial, investing and integrated estate plan with your best interest in mind. Lee is also a Chartered Financial Consultant, Chartered Life Underwriter and a Fellow of Life Management Institute, USA. Read more: http://www. theborneopost. com/2011/05/03/personal-financial-planning-improves- How to cite Personal Finance Management, Papers Personal Finance Management Free Essays Personal Finance Management Personal finance management is a topic that very few actually understand. There were no finance classes given when I was coming Into adulthood. So I had no understanding of credit scores, credit reports, and credit cards. We will write a custom essay sample on Personal Finance Management or any similar topic only for you Order Now Nor did I have a clue about interest rates and what it meant to have good credit. I was in the dark about finance period. Over the years, I have learned about debt, bad credit, and collections. These are things that I came to learn very well and struggled with not knowing how to fix these issues. I did not know the importance of making credit card payments or any type of payments on time. At the start of this course I was $89,000 In debt. I could not get a line of credit or approved for an apartment with that much debt listed on my credit report. I was literally In financial ruins and had no clue how to get out of it. I signed up for debt relief programs and I ended up owing money and still had no debt relief. So I decided to contact an attorney and we discussed different forms of debt relief programs and bankruptcy. Although bankruptcy is a last resort method that was the best choice for my current situation. I am newly divorced and I had shared debt from my past marriage, doctor ills, credit card bills, student loans, and Just a wide range of miscellaneous debts. The choice to file a chapter 7 bankruptcy was my only option. I was able to keep my possessions and all of my debt was discharged with the exception of my student loans. Now I am in the process of rebuilding my credit and this course came at the most perfect time of my life. I have learned so much from this course pertaining to finance that I can use on my journey In rebuilding my credit and making a healthier financial situation for myself. I learned the difference between open and close ended credit and how It works. Mortgage loans and automobile loans are examples of closed-end credit. An agreement, or contract, lists the repayment terms, such as the number of payments, the payment amount, and how much the credit will cost. Charge cards and bank cards are examples of open-end credit and unless you pay off the debt in full each month, you will often have to pay a high-rate of interest or other kinds of finance charges for the use of credit. I also learned about Investing Into stocks, bonds, and mutual funds, these are great ways to allow your money to grow and build interest. I had no understanding about investing money to make more money or saving for detriment. These are all things that I am interested in learning more about and incorporating these ideas in my financial plans for the future. I have learned more about filing bankruptcy and what to expect post-bankruptcy. I know that I have to wait two years to purchase a home and that is one of my desired goals. I will take the next two years and work on rebuilding my credit. Adapting a Flanagan plan would be a great start for me at this point. I have also decided to sign up with a program that keeps track of my credit report and that will allow me to know at all times what is going on with my credit. Rebuilding credit requires you to take out lines of credit and this step is where I could use the help in understanding what types of credit would be best for me. Being that my bankruptcy is fairly recent I was told to wait to apply course I knew barely anything about interest and what it does to money owed. You end up owing double if your payments are not paid on time or accounts are not paid in full and I understand that concept now but I was clearly in the dark when it came to understanding all of the different areas of finance and money management. Living outside of my means was the main reason I ended up in so much debt. So learning how to budget my earnings and making responsible decisions when spending is a way that I am learning to better my financial situation. Outside of information pertaining to credit, I have learned about different areas that are not widely spoken about such as taxes, life insurance, health insurance, 401 K, Medicare, and Medicaid. These all are different things that need to be understood during adulthood that I am Just now understand about. There are so many forms of health and life insurance that it makes it hard to fugue out which policy would work better for my family and l. There are government based insurance Lana, low income plans, and plans geared toward older adults. I have not carried insurance on myself or my children and I understand that there is a purpose in having such coverage. This class offered so much information about so many different things at the right time in my life. It has helped me to understand how important having a grasp on your financial situation is. There is more to Just getting a paycheck, cashing it, and spending it. There has to be a budget and a plan put in place. Making future plans is also a great decision. Knowing that you will have money for later expenses is always a great feeling than living check to check. I have learned so many different strategies pertaining to managing my finances from this course. Regardless to being knowledgeable of personal finance or having very little understanding of the subject taking a course of this type will expose you to so much more than Just managing money. I learned about home loans, Aria’s, taxes, credit and the different forms of it, living wills, investments, retirement plans, and so much more. I have learned to set up a financial and budgeting plan to maintain my finances on a month to month basis and long term. Having the opportunity to be a art of a finance course has opened my eyes to what I should be striving for financially. Although I still have questions regarding the different types of retirement plans, how exactly do home loans work and which one would be a better fit for me, which life insurance plans should I choose to go with, and where should I start if I wanted to invest. I still have a lot of financial questions that I need answers to but I have gathered so much information from this class that will at least put me in the right direction for financial success. Even the thought of contacting a financial planner may be an excellent choice for me at this point. Being that I have all of this great information to incorporate into my life and I am starting over financially it might not be a bad idea. I do have a great deal of confidence that I will have financial success from this point forward. Eave ever been in and although I confided in an attorney and he helped me initially to get back on track, it was this finance management course that gave me the understanding that I needed to make good financial choices. I understand the importance making good financial choices and what the outcome can be whether it is good or bad. Unfortunately, I had to experience bad credit, collections, wage arrangements, court Judgments, and low credit scores because I did not have the information that I was given through this class back then. How to cite Personal Finance Management, Papers