Life Cycle Financial Planning
Introduction
At the beginning of brainstorming for this paper, I was thinking about to write something about Chinese pension system. But during the material collection, I found that China’s pension system and ways to achieve people’s financial goals are not well developed, we all know that the system obviously had to be changed. Starting in 1997, there was a shift of the burden of pension provisions from only the state to be shared by state, employers and employees. There was also a move from PAYGO financing to a combination of PAYGO and funded systems. Last but not least, it was expanded to include all urban workers. Furthermore, China’s financial market is an emerging market, it is still not that perfect for Chinese people to select financial instruments to design their financial plans. Meanwhile, we need time for the market and the system to be improved. Therefore, I tried to find some optimal ways that can help Chinese people to achieve financial goals and I have found a theory called “life cycle financial planning”, which is designing the financial plan by different important factors in one’s lifetime. I hope it can be helpful to Chinese people to realize the important of life planning, and both private sectors and public sectors can contribute on new methods based on this theory. From the following, I will introduce what is life cycle financial planning and the main factors in it.
What is financial planning?
Financial needs continually change throughout an individual’s lifetime. However, many people are still following similar financial patterns during their life. Nevertheless, everyone has an individualized financial plan that is dependent on many different factors in an individual’s life. Financial planning is a tool used to achieve financial success based upon the development and implementation of financial goals. It is important to use financial planning to help a person avoid financial difficulties. By having well-written financial goals and
At the beginning of brainstorming for this paper, I was thinking about to write something about Chinese pension system. But during the material collection, I found that China’s pension system and ways to achieve people’s financial goals are not well developed, we all know that the system obviously had to be changed. Starting in 1997, there was a shift of the burden of pension provisions from only the state to be shared by state, employers and employees. There was also a move from PAYGO financing to a combination of PAYGO and funded systems. Last but not least, it was expanded to include all urban workers. Furthermore, China’s financial market is an emerging market, it is still not that perfect for Chinese people to select financial instruments to design their financial plans. Meanwhile, we need time for the market and the system to be improved. Therefore, I tried to find some optimal ways that can help Chinese people to achieve financial goals and I have found a theory called “life cycle financial planning”, which is designing the financial plan by different important factors in one’s lifetime. I hope it can be helpful to Chinese people to realize the important of life planning, and both private sectors and public sectors can contribute on new methods based on this theory. From the following, I will introduce what is life cycle financial planning and the main factors in it.
What is financial planning?
Financial needs continually change throughout an individual’s lifetime. However, many people are still following similar financial patterns during their life. Nevertheless, everyone has an individualized financial plan that is dependent on many different factors in an individual’s life. Financial planning is a tool used to achieve financial success based upon the development and implementation of financial goals. It is important to use financial planning to help a person avoid financial difficulties. By having well-written financial goals and