Tools on the journey to financial security

Personal Financial Planning: Statements, Reports, and Plans

As you begin your journey toward financial security, it is important to develop road maps to help you navigate your route.

Preparing and interpreting personal data is the cornerstone of personal financial planning. The following reports and statements constitute personal financial planning. Complete each definition.

•	Financial plans    are the road maps used on the journey to financial security.
•	Budgets    are forward-looking reports   , which are based on expected income and expenses. These reports are used to monitor and control spending habits.
•	Personal financial statements   are the umbrella under which important statements and reports reside.
•	One statement is thebalance sheet   , which outlines one’s financial position. Essentially, this statement is comprised ofassets   (things that are owned) lessdebts   (things that are owed), resulting in an individual’snet worth   .
•	The other statement is theincome and expense statement   , which measures financial performance over a period of time.