CONTENT STATEMENT
A personal financial plan includes financial goals and a budget, including spending on goods and services, savings and investments, insurance, and philanthropy.
CONTENT ELABORATION
A personal financial plan is designed to enable an individual to reach a goal. For a young person, it could be the steps to make a purchase such as personal electronic devices or a car. It might be to make a trip or to pay for a college education. An adult might use a financial plan for short-and long-range goals. Short- range goals would be those to be obtained within a year. These might include purchasing an appliance, new tires for a car or taking a vacation. Long-range goals take longer, such as saving to purchase a house, pay for a child’s college education or saving for retirement.
A personal financial plan includes a budget that estimates the income and expenses over a specific period of time. A budget can be used to manage spending and achieve financial goals. Long-range plans involve strategies for savings (e.g., money- market accounts, certificates of deposit and other types of time deposits).
Investments are intended to maximize savings (e.g., bonds, U.S. Treasury securities, stocks, mutual funds) but do involve greater risks.
Insurance is a way to protect the goals of an individual’s financial plan. Generally, the most common insurance plans are life, health, automobile and home.
Many personal financial plans include philanthropic giving (e.g., donations to a religious or nonprofit organization throughout one’s life or after one’s death).
EXPECTATIONS FOR LEARNING
Develop a financial plan that includes both short-and long-term goals within a budget, including spending on goods and services, savings and investments, and insurance, and philanthropy.