Discussion Answer 2 Questions And Comment On 2 Students 250 300 Words For Answers Need Within 10 Hours

Question 1:

From Ch. 19: Why is a behavioral review so relevant at this point in the planning process?  And… list and describe at least one of the five keys to a successful financial plan.

Student 1:

A behavioral review is relevant when completing the planning process because human behavior and its shortcomings play an important role in the success of the plan. What a statistically sound plan achieves can fail to align with one’s personal goals and objectives. Therefore, they may not follow the advice that contribute to its success. Moreover, humans are susceptible to behavioral flaws such as biases, bad memory, and lack of knowledge, all of which can make a plan fail. 

According to Altfest (2017), five keys to a successful financial plan are A specific statement indicating that the goals are attainable considering the household’s financials. The disclosure of crucial assumptions such as “salary growth, financial investment returns, cost increases, retirement age, and longevity”. A behavioral review. Possible alternative solutions. For example, when forecasts show a shortfall, there should be solutions ranked by preference to remedy it. A review process that confirms if the statement in the first step still applies. 

Reference:
Altfest, L. J. (2017). Personal financial planning. McGraw-Hill Education.

Question 2:

From Ch. 19: What are some of the reasons that a financial plan is important?  How would you communicate this to a skeptic? 

Student 2:

The reason why the Financial plan holds a significant importance: Increase in cash flow: Lessening the unwanted expenditures which will also part of effective management of income which may aid to increase the cash flow and can be utilized for better opportunities. Effective management of income: Financial planning aids towards effective management of income which includes one’s earnings and expenditures during a certain time period and the savings that could be done during this time. This depicts an effective management of income. By managing this routine regularly can be compared with past trend which may result in increasing the efficiency  of management. Increase in Capital: When the cash flow increases the capital also increases which is utilized for investment that aids to improve the entire financial stability.  Better standard of living: Increase in wealth helps to make one’s standard of living better as the cash inflow increases.  Managing uncertainty: Managing uncertainty means to manage the future and not being wealthy which depends on how much one is prepared for any uncertainties that can rely in the future. Such financial planning can aid to oneself to be prepared for the future. 

With the help of all these reasons one could communicate this to skeptic that financial planning is important for personal as well as business environment.

Reference: https://soleraam.com/2018/08/5-reasons-you-need-to-focus-on-the-importance-of-financial-planning-now-not-later/

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