Personal Finance Definition
One of the major areas of finance in the economic sector is personal finance. There are actually three major areas of finance. They are primarily
1. Corporate Finance
2. Public Finance
It also refers to how a person manages to obtain the budget which is considered. It further refers to the method of saving the budget and a detailed estimate of the expenditure of the person.
Thereby it refers to how a person spends the money resources when he has already considered the financial risks and the future encounters that would follow.
There are various problems which are encountered in financial planning and analysis. The primary errors which are faced in preparation of financial planning and analysis are as follows
The teams which are deployed in financial planning often face a common problem. This refers to collaborating inside the errors in a vast organization. They also get confused with the weird versions of data that are received. As a result of this, they miss important data in their calculation
Coping up with the uncertainty
Another problem which is faced with financial planning is to cope up with the precariousness in the data. If there are incomplete data provided, the team deployed will find it very difficult to solve the problem. This causes a problem in handling the future consequences.
Single data viewing error
A third problem which is faced by the team is dealing with the numbers. They come in various forms from different areas in the company. The team fined it difficult in unifying the numbers and decoding them in a simpler form
Communicating and collaborating
This is one of the common problems which are faced by the team which is deployed. The inputs come up from multiple sources. Now, analyzing the data from the sources and evaluation of the results are very difficult. The problems need to be dealt with by real decision makers.
It is always not possible to give an actual update of the information.
Areas of financial planning
There are several areas where financial planning is executed. They are being set by the financial standard board. The major areas where financial planning are extensively used are
1. Cash Flow Management
It refers to the financial position of a person, and it deals with the cash inflow and outflow.
2. Risk Management
It is basically the estimate of what could be the consequences in the near future and how those consequences can be mitigated.
3. Investment Planning
It refers to the collection of enough wealth for making large purchases.
4. Tax Planning
It is a method by which the individuals enjoy maximum benefits in paying taxes.
It refers to the planning of how a person’s asset should be disposed of when he dies.