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Post by Jayme Hanson on Nov 19, 2007 21:36:07 GMT -5
Financial planning is the process of defining goals, developing a plan to achieve them, and putting the plan into action. It is the blueprint (the plan) for handling all aspects of your money.
Financial planning is an ongoing, thinking process. The plan itself might be in writing, but it can and should change over time as the circumstances in your life and business change.
A good financial plan will distinguish between wants and needs.
Needs are essentials, the basics of life such as food, clothing and a place to live. Wants simply increase the quality of living. Going to the movies, eating out and going for an afternoon drive are wants. These are all fun and interesting to do, but your life wouldn't be over tomorrow if you couldn't go to the movies tonight.
There is nothing wrong with wants, but for most people with limited amounts of money, needs have to get taken care of first.
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