1.7 Financial Planning

• What is financial planning primarily concerned with?

  Managing money for goals
• Monitoring and adjusting your financial plan is optional

  False
• One of the initial steps in financial planning is assessing your current financial situation
• Match the element of financial planning with its description:

  Assessment ↔️ Evaluating your current financial situation

  Goal Setting ↔️ Determining your financial objectives

  Plan Development ↔️ Creating a strategy to reach your goals
• Regularly reviewing your financial plan is necessary for adjustments

  True
• Calculating monthly income and expenses helps determine surplus or deficit


  True
• Steps in financial planning

  1️⃣ Assess your financial situation

  2️⃣ Set financial goals

  3️⃣ Develop a financial plan

  4️⃣ Implement the plan

  5️⃣ Monitor and adjust the plan
• Savings in a personal budget refer to the amount set aside for future goals or emergencies.


  True
• Methods for saving money

  1️⃣ Create a budget

  2️⃣ Cut unnecessary expenses

  3️⃣ Set specific savings goals

  4️⃣ Automate savings
• What does growth investing focus on?

  High capital appreciation
• Investment strategies refer to the different approaches individuals can take when investing their money
• Index investing tracks the performance of a broad market index, such as the S&P 500
• What is an example of a short-term financial goal?

  Saving for a down payment
• Steps involved in financial planning

  1️⃣ Assess current financial situation

  2️⃣ Set financial goals

  3️⃣ Develop a plan

  4️⃣ Implement the plan

  5️⃣ Monitor and adjust
• Monitoring and adjusting your financial plan is necessary for long-term success.

  True
• Expenses in a personal budget include spending on needs and wants.


  True
• Steps involved in financial planning

  1️⃣ Assess current financial situation

  2️⃣ Set financial goals

  3️⃣ Develop a plan

  4️⃣ Implement the plan

  5️⃣ Monitor and adjust
• Financial planning involves managing money to achieve goals like retirement or paying off debt
• What is included in the income component of a personal budget?

  Money earned from wages
• Identifying short-term, medium-term, and long-term objectives is part of setting financial goals
• What is a personal budget?

  A financial plan
• Calculating monthly income and expenses helps determine whether there is a surplus or a deficit
• Budgeting involves tracking income and expenses to allocate funds
• Match the investment strategy with its description:

  Diversification ↔️ Spreading investments across asset classes

  Value Investing ↔️ Identifying undervalued assets

  Income Investing ↔️ Prioritizing dividend-paying stocks

  Growth Investing ↔️ Focusing on emerging industries
• Diversification involves spreading investments across different asset classes to reduce risk.


  True
• Why should you invest in a variety of asset types and sectors?

  Reduce the impact of poor performance
• Short-term financial goals are typically achieved within 1-2 years
• The first step in financial planning is assessing your current financial situation
• Match the components of a personal budget with their descriptions:

  Income ↔️ Money earned from wages

  Expenses ↔️ Money spent on needs and wants

  Savings ↔️ Amount set aside for goals

  Surplus ↔️ Income exceeds expenses
• What is the difference between income and expenses in a budget called?

  Surplus or deficit
• The savings component of a budget is the amount set aside for future goals or emergencies
• What is the definition of financial planning?

  Managing money for goals
• What are included in monthly expenses?

  Rent, utilities, groceries
• Diversification in investing involves spreading investments across different asset classes to reduce risk.


  True
• Why is diversification important in investment planning?

  Mitigates risk
• What does growth investing focus on?

  High capital appreciation
• Financial goals can include saving for retirement or paying off debt.


  True
• Long-term financial goals are achieved in 5+ years.


  True
• What is the purpose of setting financial goals in financial planning?

  Identify short-term objectives
• Income in a personal budget includes money earned from wages, salaries, and investments