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ADMS 3530 Quiz: Financial Planning Notes PT1
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Department
Administrative Studies
Course
ADMS 3530
Professor
King Lois
Semester
Winter

Description
LECTURE 1 Introduction (1) Financial Planning Process = series of decisions on how much money you need at some future time to meet your goals How to Choose an Advisor = must be technically competent, honest, thoroughly committed to your personal financial needs, does not make extravagant claims & has your long run interests in mind Keeping Up to Date = environment of personal finance changes rapidly (structural factors, tax rules, financial instruments). Must concentrate on fundamental principles (doesn’t change quickly & gives a long term basis for FP). Consumer spending, (un)employment rates, expected future tax rates & income brackets are all factors Know What You Need = understand yourself & the financial circumstances you are in. Be aware of the surrounding environment & your nation’s economy (rate changes could affect your income, budgeting, planning). Be rational, don’t bite off more than you can chew (know your limits & restrictions). Objectives of Personal Financial Management = manage finances of an individual & their family. Have enough income to Elements of a Financial Plan (Set Goals, Actions Plans, Commitment, Feedback) Selecting Financial Advisor 1. Salaried Employees of Institutions = give advice for free or for a nominal fee (e.g. banks or trust companies). The advice given is limited in value, its purpose is to sell you the institutions’ products. 2. Commission Planners = get compensation from fees & commissions from their services & recommended products. They steer you to products with the highest paying commission. 3. Fee Based Planners = get compensation partly from a fee & partly from commissions from the institutions 4. Fee for Service = charge on an hourly basis & take no commission Setting Goals & the Financial Planning Process (3) Goal VS Desire = goals are specific; desires are vague & can be seen as wishes Ranking of Goals = unrealistic to accept all goals. Make short/long term goals, set priorities & pick most important ones 2 Attributes of a Financial Goal: expressed & measured in dollars AND there’s a completion time LECTURE 2 Time Value of Money (2) *Practice* LECTURE 3 Measuring & Controlling Personal Finances (4) Articulation = income statement items all link directly to balance sheet, & net worth is the exact sum of all previous incomes minus DIVs paid Defining the Family = any group of ppl who share (pool them & make communal decagons on its usage & management) their wealth, revenues, expenses Discretionary Expenditure = family chooses, usually purchases of major assets or large charitable donations Non-Discretionary Expenditures = family has no immediate control (repayments & debt) Envelope System
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