1. Personal Financial Planning: Theory and Practice Debbie Harrison productFormatCode=P01 productCategory=2 statusCode=25 isBuyable=true subType= path/ProductBean/courseSmart ISBN-10: 027368101X • ISBN-13: 014.
2. TRAINING MANUAL BOOKKEEPING FINANCIAL &. Management and financial planning. Jean-Alexandre Scaglia Harrison S.

1. Personal Financial Planning
2. Personal Financial Planning Software

Ever thought about what life would be like without maps? We probably wouldn’t venture very far because the fear of the unknown would likely hold us back. Planning for a successful financial future can also be scary and overwhelming, especially when you don’t know where to go or how to get there. That’s why many people choose to pay to work with a financial advisor who can help eliminate the confusion and map out a financial plan for them. But that’s not always necessary. If you prefer to do some, or all, of your own financial planning, we’ve got the tools to help you with this simple DIY planning guide. Table of Contents.

Your DIY Financial Planning Guide Ever thought about what life would be like without maps? We probably wouldn’t venture very far because the fear of the unknown would likely hold us back. Planning for a successful financial future can also be scary and overwhelming, especially when you don’t know where to go or how to get there. That’s why many people choose to pay to work with a financial advisor who can help eliminate the confusion and map out a financial plan for them. But that’s not always necessary.

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If you prefer to do some, or all, of your own financial planning, we’ve got the tools to help you with this simple DIY planning guide. First step: Get goals! Financial planning starts with dreaming and then setting goals. You need to know where you want to go before you can decide how to get there. Think about your short-term goals, such as paying off credit card debt in one year; intermediate term goals, such as saving for a down payment on a house in three years; and long-term goals, such as sending your kids to college in 10-15 years and retiring in 30 years.

Write (or type) your goals down and make sure to assign each one a dollar amount and target date. That will help make them more real and hold you accountable. Keep the list in sight to help motivate you as you work toward achieving your goals. Reality check. Before you can plan for the future, you need to have a good understanding of where you stand now. Calculate your net worth by subtracting your debts (liabilities like mortgage loan or credit card balances) from the total amount of what you own of value (assets like your retirement and bank account balances). Then calculate what you can reasonably save each month, if anything, after you’ve covered expenses (both fixed, like rent or electric bills, and discretionary, like eating out).

Don’t let a negative net worth or monthly cash flow get you down. Be empowered by the fact that this financial planning will get you moving in the right direction so you can turn that around! Ditch your debt. Too much debt puts you at financial risk and hurts your chances of achieving your goals. If you spend more than you earn, use your budget to identify areas of opportunity for cutting back and make a top priority.

If you have multiple debts and managing them is overwhelming, try creating a clear plan of action to pay them off by using this. Be protected. Financial hazards like an unexpected illness or accident, a job loss, an economic recession and a market downturn are inevitable. You can minimize their financial impact on yourself and your family by having an adequate emergency fund and the right insurances in place. Try to save three to six months’ income in a bank savings account. If you own a house, you can also consider getting a home equity line of credit for emergency use only.

Insure what you cannot comfortably afford to replace. For most people, that means having auto, renters or homeowners, liability, health, disability and life insurance. Chances are you need more coverage than you think. Insurance you get through your employer (if any) should also be supplemented with insurance you buy on your own.

Shop around and make sure you buy your policies from a reputable, financially sound insurance company by checking their. Where there’s a will. Every adult should have a will and a, as well as a and living will (aka “medical directive”), which help lay out your wishes for medical care in case you’re incapacitated. We don’t like thinking about it either.) You can use an estate planning attorney to draft these documents for you or you can try an online, which can be cheaper. Tackle taxes.

There are plenty of resources online to help you file as needed and maximize deductions. However, if your financial situation is complex, you probably want to hire a Certified Public Accountant who can give you personalized advice and recommend tax-saving strategies that you may not be aware of. Click here to find a near you.

Now it’s time to turn your money into more money. First, educate yourself on the basics of investing, including the differences between stocks, bonds, mutual funds and exchange-traded funds (ETFs), the risks and costs involved, tax implications, and the importance of diversification. It’s important to invest in something you understand. Next, set up separate accounts for each of your goals.

Each goal will likely require a different investment strategy because of differences in time horizon, risk tolerance, and growth expectations. You’ll help yourself tremendously by setting up automatic monthly contributions to each account, choosing low-cost investments, and maximizing savings in tax-advantaged accounts like 401(k)s, IRAs and 529 college savings plans. (But keep in mind that student loans are available but retirement loans are not. Most financial experts agree that you should always pay yourself first!) If reading all of this makes you dizzy, you may be better off working with a qualified financial advisor.

You can find affordable financial planning services on sites like NestWise or search for Certified Financial Planners in your area here. You might also like.

Pfin5 5th edition billingsley solutions manual. 1. PFIN5 5th Edition Billingsley Solutions Manual Full download: solutions-manual/ PFIN5 5th Edition Billingsley Test Bank Full download: bank/ Chapter 2 Using Financial Statements and Budgets Chapter Outline Learning Objectives I. Mapping Out Your Financial Future A. The Role of Financial Statements in Financial Planning II. The Balance Sheet: How Much Are You Worth Today?

Assets: The Things You Own B. Liabilities: The Money You Owe C. Net Worth: A Measure of Your Financial Worth D. Balance Sheet Format and Preparation E. A Balance Sheet for Carl and Rachel Hawley III.

The Income and Expense Statement: What We Earn and Where It Goes A. Income: Cash In B.

Expenses: Cash Out C. Cash Surplus (or Deficit) D. Preparing the Income and Expense Statement E. An Income and Expense Statement for Carl and Rachel Hawley IV. Using Your Personal Financial Statements A. Keeping Good Records 1.

Managing Your Financial Records B. Tracking Financial Progress: Ratio Analysis 1. Balance Sheet Ratios 2.

Income and Expense Statement Ratios V. Cash In and Cash Out: Preparing and Using Budgets A. The Budgeting Process. 1. Estimating Income 2. Estimating Expenses 3. Finalizing the Cash Budget B.

Dealing with Deficits C. A Cash Budget for Carl and Rachel Hawley D. Using Your Budgets.

VI. The Time Value of Money: Putting a Dollar Value on Financial Goals A. Future Value 1.

Future Value of a Single Amount 2. Future Value of an Annuity B. Present Value 1. Present Value of a Single Amount 2. Present Value of an Annuity 3. Other Applications of Present Value Major Topics We can achieve greater wealth and financial security through the systematic development and implementation of well-defined financial plans and strategies.

Certain life situations require special consideration in our financial planning. Financial planners can help us attain our financial goals, but should be chosen with care. Personal financial statements work together to help us monitor and control our finances in order that we may attain our future financial goals by revealing our current situation, showing us how we used our money over the past time period, and providing a plan for expected future expenses.

Time value of money calculations allow us to put a dollar value on these future financial goals and thereby plan more effectively. The major topics covered in this chapter include: 1. The importance of financial statements in the creation and evaluation of financial plans. Preparing and using the personal balance sheet to assess your current financial situation.

The concept of solvency and personal net worth. Preparing and using the personal income and expense statement to measure your financial performance over a given time period. The importance of keeping and organizing your records. The use of financial ratios to track financial progress. Developing a personal budget and using it to monitor and control progress toward future financial goals. How to deal with cash deficits.

The use of time value of money concepts in putting a dollar value on financial goals. Key Concepts Personal financial statements play an extremely important role in the financial planning process. They can help in both setting goals and in monitoring progress toward goal achievement to determine whether one is 'on track.' Budgeting and financial planning guide future outlays. As such, they require projections of future needs, desires, and costs. Setting up a specific set of forecasts is the basis for future success. The following phrases represent the key concepts discussed in the chapter.

Personal financial statements 2. Balance sheet equation. 3. Types of assets, including liquid assets, investments, and personal and real property 4. Fair market value 5. Liabilities, including current liabilities, open account credit obligations, and long-term liabilities 6.

Net worth and equity 7. Insolvency 8.

Expenses, including fixed and variable expenses 10. Cash basis 11. Cash surplus or deficit 12.

Personal Financial Planning

Record keeping 13. Liquidity, solvency, savings, and debt service ratios 14. Ratio analysis of financial statements 15. Cash budgets 16. Estimating income 17.

Estimating expenses 18. Monitoring and controlling actual expenses 19. Time value of money concepts and calculations 20. Income and expense statement 21. Budget control schedule 22. Future value 23.

Compounding 24. Present value 26. Discounting Financial Planning Exercises The following are solutions to problems at the end of the PFIN5 textbook chapter. Preparing financial statements: In this exercise, we assume that the individual uses the cash basis of accounting rather than the accrual basis for reporting on the financial statements. Rent paid is listed as an expense.

For the year, his rent expense would be $16,200 ($1,350 x 12) unless he has rent due, the amount of which would show up as a current liability on his balance sheet. The earrings should be shown on the balance sheet as an asset—personal property. Although the earrings have not been paid for, by definition they are an asset owned by Harrison. However, they should be listed at fair market value, which is probably less than the price paid due to the high markup on jewelry. The $900 bill outstanding is listed as a current liability on the balance sheet. Since no loan payments were made during the period, a corresponding expense would not appear, but the obligation to repay the $3,500 would be shown as a liability on the.

balance sheet. However since he is “borrowing” from his parents, this may not be a liability, rather a gift from his parents. If the parents expect the amount to be repaid it is a loan; otherwise, it is a gift.

Regardless, it will increase cash and increase either liability or equity, depending upon whether it is a loan or a gift. Assuming he made 12 payments during the year, Harrison would list loan payments as an expense of $2,700.

Whether the expense is principle or interest is of no interest to Harrison; he has to pay the $2,700. If the loan cannot be prepaid that is the principle may not be paid before it is due, the remaining liability is $4,500.

If the loan can be prepaid then of the 20 remaining payments, only about half are for principal. Therefore, on the balance sheet he should show the unpaid principal of about $2,250 (20 x $225/2) as a liability.

The balance of the future payments is interest not yet due and therefore should not appear on the balance sheet. If the loan was used to purchase something of value, he would list the fair market value of the item as an asset on his balance sheet.

The $3,800 of taxes paid should appear as an expense on the income and expense statement for the period, but because the tax refund was not received during the year it would not be included as income on the statement. The investment in common stock would appear on balance sheet as a reduction in cash (an asset) and an increase in 'investments” (an asset) at the current fair market value of the stock.

Personal Financial Planning Software

Harrison’s Aunt June gave him $300. The cash on the balance sheet will increase by $300 and the equity or net worth will also increase by $300.

Preparing personal balance sheet Name(s ) Leslie Eastman BALANCE SHEET Date 30-Jun-16 ASSETS LIABILITIES Liquid Assets Cash on hand $ 70 Current Liabilities In checking 180 Telephone $ 20 Money market deposit 650 Electricity 70 Total Liquid Assets $ 900 Charge account balance 190 Visa 180 Investments MasterCard 220 U.S. Government savings bonds Stock of Alpha Corp. Total Investments $ 500 3,000 $ 3,500 Taxes Insurance Total Current Liabilities 400 220 $ 1,300 Real Property Condo and property Total Real Property Personal Property $68,000 $ 68,000 Long-Term Liabilities Condo mortgage loan Auto loans Furniture loans Total Long-Term Liabilities $ 52,000 3,000 500 $ 55,500 Automobile: 2010 Honda Civic Furniture Clothing Total Personal Property Total Assets (I) $ 9,775 1,050 900 $ 11,725 $ 84,125 Total Liabilities (II) Net Worth (I - II) Total Liabilities and Net Worth $ 56,800 $ 27,325 $ 84,125 a. Solvency: This term refers to having a positive net worth. The calculation for her solvency ratio is as follows: Solvency Ratio = Total Net Worth = $27,325 = 32.48% Total Assets $84,125 This indicates that Leslie could withstand about a 33% decline in the market value of her assets before she would be insolvent.

Although this is not too low a value, some thought might be given to increasing her net worth. Liquidity: A simple analysis of Leslie’s balance sheet reveals that she's not very liquid. In comparing current liquid assets ($900) with current bills outstanding ($1,300), it is. obvious that she cannot cover her bills and is, in fact, $400 short (i.e., $1,300 current debt – $900 current assets). Her liquidity ratio is: Liquidity ratio = Liquid Assets = $ 900 = 69.2% Total Current Debt $1,300 This means she can cover only about 69% of her current debt with her liquid assets. If we assume that her installment loan payments for the year are about $2,000 (half the auto loan balance and all of the furniture loan balance) and add them to the bills outstanding, the liquidity ratio at this level of liquid assets is: Liquidity ratio = Liquid assets = $ 900 = 27.3% Total Current Debts $3,300 This indicates that should her income be curtailed, she could cover only about 27% of her existing one-year debt obligations with her liquid assets—and this does not include her mortgage payment! This is clearly not a favorable liquidity position.

Equity in her Dominant Asset: Her dominant asset is her condo and property, which is currently valued at $68,000. Since the loan outstanding on this asset is $52,000, the equity is $16,000 (i.e., $68,000 – $52,000). This amount indicates about a 24% equity interest (i.e., $16,000/$68,000) in the market value of her real estate. This appears to be a favorable equity position. Preparing personal income and expense statement. Worksheet 2.2 is below.