Components of a Financial Plan
February 12, 2025
In the previous few articles, we have already come across the income-based approaches that are used in order to value a sports franchise. We have also had a closer look at some of the shortcomings of the income-based approach. We are also aware that the income-based approach is not the only possible way to value […]
The Indian banking system is reeling under a glut of Non Performing Assets (NPA’s). The unpaid debts of Indian corporations and households have risen to alarming levels. High level bureaucratic meetings are being held to get rid of this menace. Nonperforming assets could appear on the balance sheet of banks. This could cause a ripple […]
Traditional economic theory assumes that all money is fungible. The meaning of the word fungible is “interchangeable.” Hence, according to economic theory, if we have $100, the value of that should be the same for us regardless of how that was obtained. However, behavioral finance theory argues that this is not the case. According to […]
Common size statements are not financial ratios. Rather they are a way of presenting financial statements that makes them more suitable for analysis. However, analysts always use them in conjunction with ratio analysis. In fact, financial analysts use common size statements as the starting point to help them dig deeper. Common size statements tell them […]
In the previous article, we have already studied what risk-based supervision is. We now know why regulatory bodies all across the world are adopting the risk-based supervision system and what its benefits are. However, it is also important to understand the manner in which a risk-based supervision system can be implemented. The details of the […]
In the previous article, we learned about the three financial statements. We also learned how income statements and balance sheets are backward-looking financial statements. We also understood that the budget is the only forward-looking financial statement in the personal finance domain. It is the only statement that can be used to prevent economic mistakes from happening. This is the reason why a budget is given special importance in personal finance studies. Individuals who are highly successful in managing their personal finances attribute their success to budgeting techniques. However, there are many personal finance experts who criticize budgeting techniques as well. In this article, we will have a closer look at the advantages and disadvantages of budgeting.
The bottom line is that a budget is an important tool that can be used in the process of financial planning. However, its usefulness is subjective. Some investors derived a greater value from the budgeting process than the others.
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