ESSAY : Planning for the Future

For the Unit 10 Discussion Board, you will complete a reflective essay to address the following questions:

1) Consider what you know about personal financial matters. Where did you gain this knowledge? (My parents and personal experience) 2) Did you learn about these matters in school or some other deliberate training, or did you learn from personal experience? Personal experience and Dave Ramsey
3) Are you satisfied with your level of knowledge on personal financial matters?(Yes, awe were able to purchase our dream home and enjoy traveling. My husband and I have made sacrifices and this has allowed me to return back to school and we were able to pay for our oldest daughter’s college education, she now has her Masters Degree in Family Counseling)
4) Are you satisfied with how you have handled money in the past? In my early 20’s I learned a hard lesson with credit cards, but this made me aware of my spending habits and I attended a Dave Ramsey class in our church that helped me put my finances in order and plan for our future.
5) How do changes in interest rate, time, and compounding affect the amount of interest earned on an investment?
6) What changes will you make in the way you deal with money based on what you learned? None
7) What do you wish you had known earlier in your financial life? I wish I would of invested earlier in my employers retirement plan and a better understanding of the stock market.
8) What financial advice would you give to a young person just starting out? Invest your money early, save for college and educate yourself on investments and the stock market.

ANSWER

Planning for the Future

Personal finance involves developing and fulfilling financial goals, which may include planning for immediate financial needs, setting some money aside for my children’s education, or saving for retirement. I believe that achieving these goals depends on income, living considerations, expenses, and individual desires and goals. Additionally, one has to formulate a plan to satisfy those needs within their financial limit. However, to attain the full potential of budgeting and saving, one must familiarize themselves with financial matters to differentiate between bad and sound advice.

A financially literate person understands the rudimentary financial concepts that enable them to make sound decisions. While becoming financially literate requires some efforts and investing in education, I acquired my financial knowledge through my parents, personal experiences, and from financial guru Dave Ramsey. Even before Dave Ramsey came into the picture, my husband and I began to make hard sacrifices and follow some of the financial concepts that he teaches. My life experiences have taught me hard lessons about money after making many stupid decisions concerning money.

Fortunately, my many dumb money choices motivated me to learn from my mistakes about finance and turn my financial situation around. Presently, I believe that I am comfortable with the level of knowledge I have on matters finance since my husband and I are now able to purchase our dream home and, in the process, enjoy some bit of traveling. I must admit that the journey has been a winding one since we had to make some hard sacrifices along the way. Despite the difficulties, I am now able to return to school, and we were able to pay for our oldest daughter’s college education, who now has a Master’s Degree in Family Counselling.

As a young adult in my early 20’s, I had a bad experience with the use of credit cards that make me regret my past decisions in handling money. However, I was fortunate enough to recognize my mistakes and learned from them, which led me to attend a Dave Ramsey class in our church. The decision significantly helped to rectify my old ways and started planning.

            What I liked about Dave Ramsey is his ability to deconstruct the complex topic of personal finance and break it down into simple principles and steps that even the dullest mind can follow. Some of the take-aways I garnered form Dave Ramsey included paying off nonmortgage debt, investing 15 percent of my income on retirement, helping to pay for my children’s college tuition, and other nifty tricks.

One thing I have come to learn is that if a person wants to grow their savings, they should make a viable investment. In other words, the interest on personal loans will increase debts while investments’ benefits increase savings. When a person invests, they earn either a simple or compound interest on that investment. The difference between the two is that compound interest is more substantial than simple interest. When there is a shift in the interest rates, says a fall, the amount of interest also falls and vice versa. With compound interest, any reinvestment of the earnings yields a compound interest. Money earned from the compound interest also makes interest, and with time, the amount continues to grow.

Based on my current financial situation and what I have learned, I do not wish to change how I deal with money. However, only regret is not investing earlier in my employers’ retirement plan and not understanding the stock market. Knowing what I know now, my advice to young starters is to begin investing early and save for your college fund. Also, try to educate yourself as much as possible on how to make savvy financial decisions and learn how the stock markets work. Doing so could lead to a person’s future financial independence….