Understanding the Financial Planning Process:

1
Chapter 1

• Understanding the Financial Planning Process
• The Economic Environment

2
The Planning Environment

• Major players affecting the economic environment
• Government
• Business
• Consumers

3
Good and Services
BUSINESS
GOVERNMENT
CONSUMERS
Money payments for goods and services
4
Good and Services
Land, labor, and financial capital
GOVERNMENT
CONSUMERS
BUSINESS
Money payments of wages, interest and profit
Money payments for goods and services
5
Goods and services
Land, labor, and financial capital
Public goods services, regulations, and revenues
BUSINESS
GOVERNMENT
CONSUMERS
Taxes
Money payments of wages, interest, and profit
Money payments for goods and services
6
Economic Cycles
Levels of Employment and Production
HIGH
LOW
Expansion
Recession
Depression
Recovery
7
Government Economic Policy

• Monetary Policy
• Controls money supply
• Affects inflation
• Fiscal Policy
• Controls levels of taxation
• Sets levels of government spending on various
  programs

8
Inflation

• Measured by changes in CPI
• Affects purchasing power and interest rates
• Affects financial plans and goals

9
Summary of Chapter 1

• Personal financial planning process
• Steps
• Importance of goals
• Income and career planning
• Economic environment

10
Questions?