Factors Affecting Personal Financial Management Behaviors: Evidence from Vietnam Nguyen Thi Ngoc Mien, University of Economics Ho Chi Minh City, Vietnam. I believe greed and fear are the factors which mostly affect an individuals financial decision. ... (1981) describe financial management behavior as an area of financial decision-making, harmonizing individual motives and … With a greater ratio of current assets, the ratio of current liabilities ratio. Hopefully, if this is one of the factors affecting financial planning of yours, now you have the answer. Family Structure Marital status and dependents, such as children, parents, or siblings, determine whether you are planning only for yourself or for others as well. On the other hand, the firm having more current assets procures fund form short-term source. Programmed versus Non-programmed Decisions Programmed decisions are made in predictable circumstances and managers have clear … Apart from the state of economy, governmental policy is no less significant in influencing corporate financial decisions. There are many factors that can make decision making difficult or affect the quality of decisions. The Factors Affecting Wellbeing Analyse the relationships between the factors and explain how they can impact on wellbeing In Maslow’s hierarchy to reach self-actualisation, which is at the top, you must go through; the physiological needs, safety needs, social needs, esteem needs to then finally reach the top and these all affect your wellbeing. Personal finance and financial education represent important topics, which gain more and more local attention. Hopefully, if this is one of the factors affecting financial planning of yours, now you have the answer. You can save your notes. A) Obvious Personal Factors: i) Dependants: Our financial plan must be based on our unique personal factors and the external factors around us. Profit is earned by selling the goods so produced. Occupation. As humans, we are bred to overreact, to dwell on or even brood over any hint of risk. You will make financial decisions all your life. The problems are solved and decisions are implemented through established policy directives, rules and procedures.Non-programmed decisions are mode in unique circumstances and the results of such decisions are often unpredictable. Financing Decision. Decisions regarding the magnitude of funds to be invested to enable a firm to accomplish its ultimate goal, kind of assets to be acquired, the pattern of capitalization, pattern of distribution of firm’s income and similar other matters are included in financial decisions. The My Notes feature allows you to share given entries or to keep them private. 2.Personal: The Essential Factor Affecting Financial Planning. Personal factors that affect personal financial decisions include age, marital status, number and age of household members, and employment situation. But in cases where there are many shareholders, their wishes matter considerably. The My Notes feature allows you to share given entries or to keep them private. Similarly, if the financial institutions provide concessional assistance for priority projects, the investment decisions will be influenced in favor of such projects. Continue your personal financial journal by describing how other micro factors, such as your present family structure, health, career choices, and other individual factors, are affecting your financial planning. Capital expenditures (CAPEX) refer to funds, What is Revenue Expenditure? He can manage with a comparatively lower amount of cash as he can get funds whenever he desires. In general, the longer you have before you want to spend your money, the more aggressive you can be in investing it. Personal factors that affect child development include financial situation, housing and parenting style. However, a prudent finance manager would prefer a compromise between risk and return or between profitability and liquidity. Small firms have lower goodwill in the capital market and so their financing decisions are different from that of large firms. It would, therefore, be in the fitness of things to take the decisions in the light of external and internal factors. Whether the decision involves capital expansion, hedging assets or acquiring major equipment or merging with another firm, solid financial analysis will … If these decisions turn out to be wrong, there occurs the heavy loss of capital which is a scarce resource. As humans, we are bred to overreact, to dwell on or even brood over any hint of risk. In Bangladesh where economic policies have become more liberal, entrepreneurs are comparatively free to take up any venture that pleases them. Occupation. Before budgeting decisions are made, several issues must be considered, such as available funds and the company’s objectives. Size of business is an important factor influencing financial decisions. Since dividend is normally paid out of cash, firms with a sound liquidity position adopt a liberal dividend policy. Continue your personal financial journal by describing how other micro factors, such as your present family structure, health, career choices, and other individual factors, are affecting your financial planning. For instance, the decision to acquire a capital asset is based on the expected net return from its use and on the associated risk. It may enjoy more facilities in case of borrowing and others. Concerns those are large in size need a large capital. There are some obvious personal factors and there are some not so obvious personal factors, which can influence your financial plan. It’s important to take them into account when you have to make a decision about your future work. This attention needs to be placed in the context of the state-of-the-art research, from which future local research can emerge. Explain how economic indicators can have an impact on personal finances. Assets structure is another important factor influencing financial decisions. An individual’s nature of job has a direct influence on the products and brands he picks for himself/herself. FACTORS THAT AFFECT FINANCIAL DECISIONS Family factors Cultural factors Social factors Societal and demographic factors Economic factors Technology The media The marketplace Legal and moral factors Personal factors 13. On these factors, the firm has no control. Financial planning is an exercise that has to be unique and suitable to each person – we cannot simply take one person’s financial plan and copy it. The nature of financial decisions varies from one firm to the other. A large amount of capital is invested in these assets. (As you might expect, the links for my books go to their listings on Amazon. Factors affecting financial … In doing so, the heavy loss will have to be incurred. Main Influencing Factors There so many factors which influence the future career choice and have the effect on different levels. Type of Research Methods – Where to Apply? are important in decision making, managers should not overlook the importance of qualitative factors. In addition to that, these affect future possibilities of the business. The following external factors enter into decision-making process: Internal factors refer to those factors which are related with internal conditions of the firm such as nature of business, size of business, expected return, cost and risk, asset structure of business, structure of ownership, expectations about regular and steady earnings, age of the firm, liquidity in company funds and its working capital requirements, restrictions in debt agreements, control factor and attitude of the management. Macroeconomic Variables An important motivator in modern economies is the stability of the broader economy. The greater the risk, the higher the discount factor. The Concept of Capital and Revenue Expenditure, in the Accounting, explains why they exist in Financial Management. Similarly, in respect of inventory, while determining types of goods to be carried in stock and their size are a basic part of the sales function, a decision regarding the quantum of funds to be invested in inventory is the primary responsibility of the finance manager since funds must be supplied to finance inventory. Why are you here? The firm having more fixed assets can procure fund from long-term source. Fully Explain It by PDF and Free Download: These decisions are relatively more important because of the following reasons: These decisions are concerned with long-term assets. Thus he shapes the firm’s depreciation policy, inventory valuation and capital structure, distributes bonus share that are exempted form tax and takes a variety of financial decisions in accordance with the rules and regulations. By understanding some of these factors, you can learn a little bit more about yourself so that you are equipped to make better financial decisions. We always try to give our best to our visitor. These assets are helpful in production. There so many factors which influence the future career choice and have the effect on different levels. Since taxation absorbs a good part of a firm’s income, the finance manager normally has to find out how to minimize the tax burden. To borrow more, preferably at a fixed rate of interest, and so increase the company’s capital gearing,; To borrow for long periods rather than for short periods,; To pay back loans which incur a high interest rate, if it is within the company’s power to do so, and take out new loans at a lower interest rate. Finance. Section – Economy and Management GIDNI 422 Internal factors affecting financial decision Financial education (Carlin & Robinson, 2012; Lusardi, 2008b) and the related concept of financial literacy (Calcagno & Monticone, 2011; Lusardi, 2008a, 2008b) are frequently mentioned in relation with the process of making individual financial decisions. And also don't forget for Subscribe, Thank for ilearnlot.com site reading. These cannot be given values by the finance manager alone. They can obtain so much preference in borrowings. If a firm is engaged in manufacturing operations or in the provision of public utility services, its investment in fixed assets is large and hence the capital structure has a large share of long-term capital. Small firms may obtain their fixed assets on the lease, but large firms would need to construct their own building and assemble their own plant. These factors are beyond the control and influence of the management. Explain how economic indicators can have an impact on personal finances. This does not affect the price you pay.) Second, because of the heavy investment involved, it is very difficult to change the decision once taken. Definition: The Financing Decision is yet another crucial decision made by the financial manager relating to the financing-mix of an organization. Unit Study Objective. In such cases, the fixed cost capital, such as preference shares and debentures, may be preferred and also the firm may adopt a liberal dividend policy. This study on healthy young male students aimed to enlighten the associations between an individual’s financial decision making and surrogate makers for environmental factors covering long-term financial socialization, the current financial security/responsibility, and the personal affinity to financial affairs as represented by parental income, funding situation, and field of study. This is only possible when every factor is reviewed which can affect the decision in any way and macro environment is one of the most important factors. Taxation rules farmed by the government also shape corporate decisions. Identify the systemic or macro factors that affect personal financial planning. Identify the systemic or macro factors that affect personal financial planning. Financial decisions are taken by a finance manager alone or in conjunction with his other executive colleagues of the enterprise. It can, therefore, be said the more correct these decisions are, the greater will be the growth of business in the long run. Find the age range for your stage of life and read “Your Financial Checklist For … Age; Martial Status; Number and Age of Household members; Employment situation What are the eight main components of personal finance planning? The routine in financial management activities may be cumbersome for some corporate leaders, but these work streams help companies run efficient businesses. The Concept of Financial Decisions, The Factors Influencing Financial Decisions: 1. As an Amazon Associate I earn from qualifying purchases. For example, in such a situation in would not be advisable to go for an expansion program. When interest rates are low, it might be beneficial:. 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