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

Q.1. Define Financial Planning. 

Financial Planning is the ongoing process of defining goals, developing a plan to achieve them, and putting the plan into action. It is the blueprint for handling all aspects of our money, including spending, saving and investing.

Q.2. State the difference between needs and wants.

Needs are essentials, the basics of life like food, clothing and a place to live etc. Needs and resources are limited.
Wants simply increase the quality of living and wants are unlimited.

Q.3. Your needs can be someone`s wants- Justify it. 

It is true. People define needs and wants differently, depending on their own values. Your values are simply the beliefs and practices in your life that are very important to you.

Q.4. Write the steps in financial planning in proper order; 

Setting goals-Analyzing Information- Creating a Plan-Implementing the Plan-Monitoring and Modifying the plan.

Q.5. Goal Setting should be in a SMART Way, define it. 

It should be Specific  like someone wants to buy a motorcycle in another two years. Here, buying motorcycle is specific.
It should be Measurable like it must be known how much someone requires to achieve his/her set goal. e.g. someone requires Rs 60000 to to buy a motorcycle.
It should be Attainable i.e, it must be reachable to the person, i.e, saving of Rs 2500 per month out of his salary of Rs 20000 in another two years.
The goal set must be Realistic i.e, It should have the possibility of doing
The goal set by someone should be Time bound like he/she will buy a motorcycle within another two years.

Q.6. Discuss the steps briefly in financial planning.

• Setting the Goals in SMART way
• Analyzing Information: Here the emphasis is given to analyze information about oneself, i.e. what is the present financial position of the person.
• Create Plan: After analyzing   own Financial position one can match his resources with the goal.
• Implementing the plan: To achieve the goal it has to be implemented otherwise it will be on paper only.
• Monitor and modify the plan: After implementing the plan it has to be monitored continuously and if necessary the goal has to be revised. e.g. if saving of Rs 2500 p.m. for buying a motorcycle may not be possible because of some unexpected expense in a particular month, then double amount can be saved in the next month by curtailing other expenses.

Q.7. Define short term, Intermediate term and Long term goal.

• Short term goal: Goal planned to achieve within a day or a week or maximum within three months.
• Intermediate goal: Goals planned to achieve in few months or within a Year. Its range is in between three months to one year.
• Long term goal: Goals planned to achieve after a year.