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Chapter 10 Consumer Mathematics Financial Manage

The document discusses the five steps in the financial management process: 1) setting goals by prioritizing short-term and long-term goals that are specific, measurable, affordable, reliable and time-bound, 2) evaluating one's financial status by assessing assets and liabilities, 3) creating a financial plan by making a budget, savings goals and income strategies, 4) carrying out the financial plan, and 5) regularly reviewing and revising the plan to ensure goals are being met and the plan stays on track.

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NOOR SHAZLIN ADRIANA BINTI AHMAD KAMAL Moe
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61 views

Chapter 10 Consumer Mathematics Financial Manage

The document discusses the five steps in the financial management process: 1) setting goals by prioritizing short-term and long-term goals that are specific, measurable, affordable, reliable and time-bound, 2) evaluating one's financial status by assessing assets and liabilities, 3) creating a financial plan by making a budget, savings goals and income strategies, 4) carrying out the financial plan, and 5) regularly reviewing and revising the plan to ensure goals are being met and the plan stays on track.

Uploaded by

NOOR SHAZLIN ADRIANA BINTI AHMAD KAMAL Moe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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Chapter 10: Consumer Mathematics: Financial Management

10.1 Financial Planning and Management

It is a process that involves managing money from sources of income into savings,
expenses, protection and investment.

Five steps in financial management process

Setting goals
Evaluating financial status
Creating financial plan
Carrying out financial plan
Reviewing and revising the progress

1. Setting goals

It is a first step in the financial management process.

The financial goals must be prioritised and specific

Short-term financial goals

It can be achieved in less than a year. Short term financial goals do not involve a
large amount of money for example: purchasing a laptop, furniture, a cell phone and
others.

Long-term financial goals

It usually takes more than five years to achieve.

Long term financial goals involve a large amount of money for exmple: children's
education, medical expenses and others

SMART financial goals

Financial goals set based on the SMART concept our spending in order to
achieve the desired financial goals

\begin{aligned} &\space S- \text{Specific} \\\\& M- \text{Measurable} \\\\&


A- \text{Affordable} \\\\& R- \text{Reliable} \\\\& T- \text{Time-bound} \
end{aligned}

S−Specific
M−Measurable
A−Affordable
R−Reliable
T−Time-bound

2. Evaluating financial status


Assets and liabilities are the benchmarks for evaluating our financial status

Evaluating our financial status helps us measure our performance in the effort of
achieving our short-term and long-term financial goals.

3. Creating financial plan

Steps to consider before creating a financial plan

Define the short term and long term goals


Make an initial budget to achieve each goal
Calculate monthly savings needed to achieve the short-term and long-term goals
Analyse spending behavior
Set a time frame to achieve each goal
Determine income strategies that will help to achieve the financial goals.

4. Carrying out financial plan

It turns the financial planning into action that can be implemented

When carrying out a financial plan, we must follow the plan at an early stage.

We must ready to change and compare the planned monthly expenses and actual
expenses.

5. Reviewing and revising the progress

Reviewing and revising the progress of a financial plan from time to time is
important to make sure the cash flow is always positive.

This indirectly helps us to achieve our financial goals as planned.

Evaluation the feasibility of the short-term goals and long-term financial goals

An effective financial plan should be get aside 10 \%10% savings of the total
income prior to engaging any fixed and variable expenses.
If there is a negative cash flow, we should adjust the financial plan by reducing
the variable expenses.

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