Planning of finances is essential for each and every one, be it a school-going kid or a

retired citizen. The more early you begin to manage your money the better it is. Let’s
suppose you choose not to plan and keep spending as and when you like and one day you
wish to purchase a house but then you cannot as you hardly have any savings left. This is
what happens when you don’t plan and end up overspending. We tend to overspend
when we do not understand what we really need. We keep on spending to fulfill all our
requirements and we lose count of how much we spent. One should understand the
difference between your needs and wants. Things like daily lunch, dinner and house rent
payments are our needs which we will have to incur. But things like play stations,
videogames and movies are always an option and can be done without. If even we do
want to splurge on our wants we can set aside some of our savings over a time period and
can buy important needs like vehicles, house, higher education etc when we have
accumulated savings. This is what planning is all about, to plan, save and help us achieve
our financial goals. When you start early you can always plan for your future financial
goals and have the benefit of meeting them when you want to. This is because you have a
longer time horizon to spread out your investments and manage your portfolio across
time. Every school-going kid is taught from his childhood to count and save money for his
future so that he can use them appropriately to finance his financial goals. This tutorial on
financial planning presents various aspects of financial planning for college students.
Financial planning is very important for every individual. If people understand its
significance at a younger age, achieving your future financial goals becomes more
convenient as you can invest in different products to meet your needs.
Financial planning in India is the prerequisite of a successful and financially strong
lifestyle and gives you the edge over risks and woes of low finances at the times of
need. Proper financial planning allows you to meet your life goals and to fulfill your
dreams through better avenues. It helps you develop a confident and disciplined
outlook towards your future plans and makes you assume control of how your
money works for you. Before a specialty in personal finance was developed, various
disciplines which are closely related to it, such as family economics, and consumer
economics were taught in various colleges as part of home economics for over 100
years.
The earliest known research in personal finance was done in 1920 by Hazel Kyrk. Her
dissertation at University of Chicago laid the foundation of consumer
economics and family economics.[2] Margaret Reid, a professor of Home Economics
at the same university, is recognized as one of the pioneers in the study of consumer
behavior and Household behavior.[2][3]
In 1947, Herbert A. Simon, a Nobel laureate, suggested that a decision maker did not
always make the best financial decision because of limited educational resources and
personal inclinations.[2] In 2009, Dan Ariely suggested the 2008 financial
crisis showed that human beings do not always make rational financial decisions, and
the market is not necessarily self-regulating and corrective of any imbalances in the
economy.[2][4]
Therefore, personal finance education is needed to help an individual or a family
make rational financial decisions throughout their life. Before 1990, mainstream
economists and business faculty paid little attention to personal finance.
However, several American universities such as Brigham Young University, Iowa
State University, and San Francisco State University have started to offer
financial educational programmes in both undergraduate and graduate
programmes in the last 30 years. These institutions have published several works
in journals such as The Journal of Financial Counseling and Planning and
the Journal of Personal Finance. Research into personal finance is based on
several theories such as social exchange theory and andragogy (adult learning
theory). Professional bodies such as American Association of Family and
Consumer Sciences and American Council on Consumer Interests started to play
an important role in the development of this field from the 1950s to 1970s. The
establishment of the Association for Financial Counseling and Planning Education
(AFCPE) in 1984 at Iowa State University and the Academy of Financial Services
(AFS) in 1985 marked an important milestone in personal finance history.
Attendances of the two societies mainly come from faculty and graduates from
business and home economics colleges. AFCPE has since offered several
certifications for professionals in this field such as Accredited Financial Counselor
(AFC) and Certified Housing Counselors (CHC). Meanwhile, AFS cooperates
with Certified Financial Planner (CFP Board).[2]
As the concerns about consumers' financial capability have increased in recent
years, a variety of education programs has emerged, catering to a broad
audience or to a specific group of people such as youth and women. The
educational programs are frequently known as "financial literacy". However,
there was no standardized curriculum for personal finance education until after
the 2008 financial crisis. The United States President’s Advisory Council on
Financial Capability was set up in 2008 in order to encourage financial literacy
among the American people. It also stressed the importance of developing a
standard in the field of financial education.
A Turning Point
The way people looked at investing, estate planning, retirement planning,
and tax planning was turned on its head. The investment business started to
change, too. Early in his career, Richard Averitt III learned about investing at
a wirehouse where the focus was on “investment-opportunity-driven” sales–
when a new bond or other product came to market, representatives made a
list of clients and other prospective buyers and called to talk to them about
the product. On the flip side of this is the financial planning movement that
Averitt describes as “oriented around a methodology that asks, ‘Who is my
client and what are his or her needs?’ Financial planning began to develop a
new image, not associated with a failed investment, but with a valid
methodology.” Averitt credits Tony Greene, former president, CEO, and
chairman of Raymond James Financial Services, with leading the IAFP out of
that dark time, and into financial planning as we know it today, and says
Greene was instrumental in combining the ICFP and IAFP into one
organization which became the FPA in 2000.
“Financial planning today has become less associated with any product or
investment type at all and far more associated–as it should be–with
individual investor planning and investor needs,” notes Averitt. While
Raymond James is a large firm, it is unique in the way in which advisors can
work with the firm. They can be full-time employees or affiliate as
independent professionals, as financial planners or as brokers, and there are
several degrees of affiliation they can choose.
Through the bull market that started in 1982, Alan Greenspan’s appointment
as Chairman of the Federal Reserve, the “Black Monday” market crash in
1987, Gulf War I, the ’90 to ’91 recession, a drop in real estate prices, the
tech bubble, and record heights for the DJIA, Nasdaq, and the S&P 500,
financial planning moved ahead. In 1985, the CFP Board was founded. In
1987, the CFP Board recognized 20 universities that offered registered
programs for financial planners. Today, the CFP Board reports that there are
more than 190 colleges and universities offering 300 registered programs for
planners. In 2007, CFP certificants will need a bachelor’s degree.