1. Financial planning and its essence. Financial planning and forecasting play pivotal roles in steering an
individual's or organization's financial stability and success. Let's break down each
concept:
a) financial planning b) financial forecasting A) Financial planning -
involves creating a roadmap to achieve economic
objectives, including managing income, expenses, investments, and assets to achieve
short - and long-term financial goals. It typically includes the following elements:
I. Goal Setting: Identifying and prioritizing financial goals, such as buying a home,
funding education, saving for retirement, or starting a business.
II. Budgeting: Creating a budget that outlines income, expenses, and savings—
providing a structured approach to manage day-to-day finances and work toward
achieving larger financial objectives.
III. Investment Planning: Developing strategies to grow wealth and achieve
financial goals through investments in stocks, bonds, mutual funds, real estate, or
other avenues.
IV. Risk Management : Understanding and minimizing financial risks, such as
health-related expenses, market volatility, or unexpected life events, through
insurance, emergency funds, and other risk-mitigating measures.
V. Retirement Planning: Anticipating and preparing for the financial needs
associated with retirement, including estimating retirement expenses, determining
sources of retirement income, and creating a plan for long-term financial security.
