Trimester 3, 2020/2021 PBF0014 Introduction to Personal Finance

Exercise 1: Chapter 1 Introduction

Question 1 (Trimester 1, 2016/2017)
a) List TWO importance of personal financial planning.

-accumulate wealth for special expenses

-save for retirement

b) Explain the FIVE basic steps in the personal financial planning process.

1) Evaluate your financial health

2) Define your financial goals

3) Develop a plan of action

4) Implement your plan

5) Review your progress, reevaluate, and revise your plan

c) Describe the time horizon for short-term, intermediate-term, and long-term financial goals. Give
ONE example of each.

Short-term: within 1 year. Exp: Pay off bills and credit cards

Intermediate-term: 1 to 10 years. Exp: Save for older child’s college

Long-term: more than 10 years. Exp: Save for younger child’s college

Question 2 (Trimester 3, 2016/2017)

a) Financial planning is an ongoing process that will change as your financial situation and position in
life change. Briefly explain the FIVE basic steps in personal financial planning process.

1) Evaluate your financial health

2) Define your financial goals

3) Develop a plan of action

4) Implement your plan

5) Review your progress, reevaluate, and revise your plan

b) List THREE examples of short-term goals and TWO examples of intermediate term goals.

-short-term goals: long-term goals:

Pay off bills and credit cards Save for younger child’s college

Purchase insurance Purchase retirement home

Purchase a major item

Question 3 (Trimester 1, 2017/2018)
a) State the FIVE basic steps to personal financial planning.

Evaluate your financial health

Define your financial goals

Develop a plan of action

Implement your plan

Review your progress, reevaluate, and revise your plan

b) Regardless of what life stages you are in, you are likely to have different term of financial goals.

c) List THREE examples of short-term goals and TWO examples of long-term goals.

-short-term goals: long-term goals:

Pay off bills and credit cards Save for younger child’s college

Purchase insurance Purchase retirement home

Purchase a major item

Question 4 (Trimester 3, 2017/2018)

a) Personal financial planning will help us to achieve our financial and lifestyle goals. Specifically, list
TWO importance of personal financial planning for an individual.

-Save for retirement

-“Cover your assets”

b) Explain the THREE stages in the financial life cycle. Give ONE example of financial goal for each
stage.

c) Identify TWO principles of personal finance.

Principle 1: The Best Protection Is Knowledge

• Understand the basics of personal finance.

• Take responsibility for your lifetime financial plan.

• Seek professional advice wisely.

Principle 2: Nothing Happens Without a Plan

• Easier to think about spending than about saving.

• Saving must be planned.

• Putting off a financial plan means goals are harder to achieve.