What Do You Know About Financial Planning?
- By Uchenna Ani-Okoye
- Published 10/26/2008
- Financial Planning
The art of financial planning essentially involves five main tenets, there are, budgeting, management of large purchases, liquidity management, insurance and long-term investing. The budgeting component requires that the investor decide how much of his or hers overall income will be spent and how much of it will be saved.
The equation is income surpassing expenditure, this indicates saving, and thence and gain in net income and assets. If this happens in reverse, there is negative saving, or an ascension in liabilities. The excess of assets over liabilities represents the net worth of the investor.
Insurance is a type of financial planning in itself; it essentially means paying money to an insurer that protects you. Your financial planning insurances should protect you in the event of the death of the policyholder. You can also get a financial planning insurance out to cover numerous assets such as a car or property. It can also provide protection against many different things such as critical illness or sickness.
Financial planning can be conceived as a matching process for identifying, planning for, and coming together goals related to financial needs for individuals, families, and small businesses. Every body needs financial planning not just companies and businesses; it is used for small scale proceedings as well as large ones, from going to the shops to purchasing lottery tickets.
Liquidity financial planning is basically money that can be spent immediately. The more liquid any financial constitution is the less returns, it will provide. Liquid funds are basically cheque-able accounts and bank notes, they pay little to no interest. Building societies and bank deposits are pretty much less liquid institutions that although pay some interest, they pay interest with some amount of restrictions to accessibility. It is essentially the company's decision on whether or not they wanted a lot of liquidity available as it doesn't incur any interest.
Uchenna Ani-Okoye is an internet marketing advisor and co founder of Free Affiliate Programs For more information and resource links on financial planning visit: College Financial Planning
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