4.1.3: The Financial Planning Process

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Learning Objectives

Identify the three stages of the personal-finances planning process.
Explain how to draw up a personal net-worth statement, a personal cash-flow statement, and a personal budget.

We’ve divided the financial planning process into three steps:

Evaluate your current financial status by creating a net worth statement and a cash flow analysis.
Set short-term, intermediate-term, and long-term financial goals.
Use a budget to plan your future cash inflows and outflows and to assess your financial performance by comparing budgeted figures with actual amounts.

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