The Master Financial Planning Show

A key component of personal finance is financial planning, a dynamic process that requires regular monitoring and reevaluation.

In general, it has five steps:

1. Assessment: One's personal financial situation can be assessed by compiling simplified versions of financial balance sheets and income statements. A personal balance sheet lists the values of personal assets (e.g., car, house, clothes, stocks, bank account), along with personal liabilities (e.g., credit card debt, bank loan, mortgage). A personal income statement lists personal income and expenses.
2. Setting goals: Two examples are "retire at age 65 with a personal net worth of $1,000,000" and "buy a house in 3 years paying a monthly mortgage servicing cost that is no more than 25% of my gross income".  Setting financial goals helps direct financial planning.
3. Creating a plan: The financial plan details how to accomplish your goals.
4. Execution: Execution of one's personal financial plan often requires discipline and perseverance.
5. Monitoring and reassessment: As time passes, one's personal financial plan must be monitored for possible adjustments or reassessments.