Class 9 Exam  >  Class 9 Notes  >  Introduction to Financial Markets for Class 9  >  Chapter Based Questions: What is Financial Planning ?

Chapter Based Questions: What is Financial Planning ? | Introduction to Financial Markets for Class 9 PDF Download

Q.1. Choose the correct answer. 

(i) People use some kind of a _____________to achieve their goal.
(a)
Plan
(b) Commodity
(c) Coin 

Correct Answer is Option (a)

(ii) The common factor which you need for any of your personal spending is
(a)
Parents
(b) Friends
(c) Money 

Correct Answer is Option (c)

(iii) Financial planning is _____________ .
(a) 
a static process
(b) an ongoing process
(c) a finished process 

Correct Answer is Option (b)

(iv) Financial planning distinguishes between needs and_________.
(a) 
Money
(b) Wants
(c) People

Correct Answer is Option (b)

(v) Which of the following is an essential or basics of life?
(a)
Needs
(b) Wants
(c) Gold

Correct Answer is Option (a)

Q.2. Fill in the blanks. 

(i) ______ is the process of defining goals, developing a plan to achieve them, and putting the plan into action.
(ii)  ________and ___________ are the limited resources for doing anything we want.
(iii) Wants increase the ___________ of life.
(iv) A goal is a ______, something we want or need.
(v) The process of evaluating information about oneself is known as ______.
 

(i) Financial Planning
(ii) Time and Money
(iii) Quality of Living
(iv) Destination
(v) Analysing Information

Q.3. Match the following.

(i) Goal - Increases the quality of life
(ii) Needs - Matching resources with goals
(iii) Wants - Direction to plan of action
(iv) Values - Basics of life
(v) Creating a plan - Telling the truth
 

(i) Goal - Direction to plan of action
(ii) Needs - Basics of Life
(iii) Wants - Increases the quality of Life
(iv) Values - Telling the truth
(v) Creating a plan - Matching resources with goals

Q.4. True or False.

(i) Financial planning is the plan for handling all aspects of your money, including spending, saving, and investing.
(ii) Goals are based on one’s own values.
(iii) Setting goals are to be measurable.
(iv) After creating a financial plan it should not be changed for any reason.
(v) Short term goals have a time frame of up to one year.

(i) True
(ii) False
(iii) True
(iv) False
(v) False

Q.5. Re-order the following activities according to their order of existence in financial planning.

(i) Analyse information
(ii) Monitor and modify the plan
(iii) Create a plan
(iv) Setting goals
(v) Implementing the plan

(i) Setting goals
(ii) Analyse information
(iii) Create a plan
(iv) Implementing the plan
(v) Monitor and modify the plan

Q.6. Answer the following briefly

1. What is financial planning?

Ans: Financial planning is the process of defining goals, developing a plan to achieve them, and putting the plan into action. It involves setting financial goals, analyzing information, creating a plan, implementing the plan, and monitoring and modifying the plan as needed. Financial planning helps individuals manage their resources, make informed financial decisions, and achieve their financial objectives.

2. Differentiate between Needs and Wants.

Ans: 

Needs are essential for survival and include basics like food, clothing, and shelter. They are necessary for living and maintaining a stable life.

Wants are desires that improve the quality of life and include things like entertainment, vacations, and luxury items. While wants are enjoyable, they are not essential for survival.

3. Why goals are to be realistic?

Goals need to be realistic to ensure they are achievable. Unrealistic goals can lead to frustration and demotivation if they are not attainable. Realistic goals are based on one's current resources and capabilities, making it more likely to successfully achieve them and build confidence for setting future goals. Realistic goals also provide clear direction and help in effective planning and resource management.

4. Who benefits from financial planning?

Ans: Financial planning benefits a wide range of people, including:

  • Individuals: It helps them manage their finances, set and achieve financial goals, and prepare for future expenses and emergencies.
  • Families: It aids in budgeting, saving for education, buying a home, and ensuring financial security.
  • Businesses: It assists in managing cash flow, planning for growth, and achieving long-term financial stability.
  • Retirees: It ensures they have sufficient funds to maintain their lifestyle and cover healthcare costs in retirement.
  • Low-income earners: It helps in maximizing limited resources and planning for future needs effectively.

Overall, anyone looking to manage their finances better and achieve financial stability can benefit from financial planning.

Q.7. Answer in detail.

1. Describe the "SMART" way of defining goals.

Ans: The "SMART" criteria provide a clear framework for setting goals to increase the chances of achieving them. Each letter in "SMART" stands for a key attribute:

  • Specific: Goals should be clear and specific, answering the questions of what, why, and how. For example, "I want to save Rs. 20,000 for a vacation to Goa in six months."

  • Measurable: Goals need to be measurable to track progress and know when they are achieved. For instance, "I will save Rs. 3,333 each month to reach Rs. 20,000 in six months."

  • Achievable: Goals should be realistic and attainable, considering the resources and constraints. For example, saving Rs. 3,333 each month should be feasible given your income and expenses.

  • Relevant: Goals should align with broader objectives and be worthwhile. For instance, saving for a vacation is relevant if it aligns with your personal value of spending quality time with family.

  • Time-bound: Goals need a deadline to create urgency and prompt action. For example, "I will save Rs. 20,000 by December 31st."

2. Describe with an illustration about creating a financial plan.

Ans: Creating a financial plan involves several steps, each building on the previous one to ensure a comprehensive approach. Here is an illustration using an example of saving for a new laptop:

Step 1: Set Goals

  • Goal: Save Rs. 50,000 for a new laptop within one year.

Step 2: Analyze Information

  • Current Financial Status: Monthly income is Rs. 25,000. Monthly expenses are Rs. 20,000, leaving Rs. 5,000 available for savings.
  • Resources: Existing savings of Rs. 10,000.

Step 3: Create a Plan

  • Monthly Savings: Allocate Rs. 4,000 from monthly savings towards the laptop fund.
  • Additional Savings: Allocate any additional income from bonuses or part-time work.

Step 4: Implement the Plan

  • Actions: Set up a separate savings account for the laptop fund. Automate monthly transfers of Rs. 4,000 to this account.
  • Discipline: Avoid unnecessary expenses and stick to the budget.

Step 5: Monitor and Modify the Plan

  • Regular Review: Check the savings progress monthly.
  • Adjustments: If additional income is earned, increase the monthly savings amount. If unexpected expenses arise, adjust the goal timeline or savings amount accordingly.
By following these steps, you create a structured financial plan that increases the likelihood of achieving your goal of buying a new laptop within a specified timeframe.
The document Chapter Based Questions: What is Financial Planning ? | Introduction to Financial Markets for Class 9 is a part of the Class 9 Course Introduction to Financial Markets for Class 9.
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FAQs on Chapter Based Questions: What is Financial Planning ? - Introduction to Financial Markets for Class 9

1. What are the key characteristics of money?
Ans. The key characteristics of money include durability, portability, divisibility, uniformity, limited supply, and acceptability as a medium of exchange.
2. Why is durability an important characteristic of money?
Ans. Durability ensures that money can withstand wear and tear over time, allowing it to be used repeatedly without being easily damaged or destroyed.
3. How does portability play a crucial role in the concept of money?
Ans. Portability ensures that money can be easily carried and transferred from one place to another, making transactions more convenient and efficient for individuals and businesses.
4. Why is acceptability considered a key characteristic of money?
Ans. Acceptability means that money is widely recognized and accepted as a medium of exchange in transactions, which is essential for its effectiveness in facilitating trade and commerce.
5. What is the significance of limited supply in the context of money?
Ans. Limited supply ensures that the value of money remains relatively stable and prevents excessive inflation, making it a reliable store of value for individuals and businesses.
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