Business and Personal Finance © 2007

Chapter 1: Personal Financial Planning

Chapter Summaries

• Personal financial planning means managing your money (spending, saving, and investing) so that you can achieve financial independence and security.
• The six steps of financial planning are: (1) Determine your current financial situation; (2) develop financial goals; (3) identify alternative courses of action; (4) evaluate alternatives; (5) create and use your financial plan of action; and (6) review and revise your plan.
• The most important factors that influence personal financial planning are your life situations, your personal values, and outside economic factors.
• For all your financial decisions, you must make choices and give up something. These opportunity costs, or trade-offs, can be personal or financial.
• The eight strategies for achieving your financial goals and avoiding money problems are: Obtain, plan, spend wisely, save, borrow wisely, invest, manage risk, and plan for retirement.