Personal Finance- Financial Planning

As a member of a household- whether as an individual or a man or woman of a nuclear family unit- it is advisable to make financial plans based on current income and expenses, as well as projections of future income and expenses. Income is usually in the form of job wages/salary, though unearned income from investments may also occur, especially for those fortunate enough to own stock or receive interest from bank or other accounts or other sources. A portion of one's income must be paid (by law) to the U.S. federal government as well as one's state government on an annual basis; you- perhaps (recommended) with an accountant's assistance- are required to complete the required paperwork, including a 1040EZ or equivalent form, in calculating taxes owed to the government (or refund owed to you if more money was already withheld than was needed). In general, expenses consist of anything requiring payment of money, including planned expenses such as food, utilities, insurance, etc. as well as unplanned expenses such as unplanned repairs, replacement of broken items, etc. The amount of money you/your household is able to save towards long-term goals (i.e. college tuition for kids, retirement, etc.) equals after-tax income minus the sum of all expenses for the year. (There are various options for investing these savings to possibly obtain a substantial return over time). There are possible objections to the notion of making long-term goals. Examples are: "How can I accurately anticipate unplanned expenses?" "How can I know what my salary will be at any future point in time? What if I am laid off and unemployed or underemployed for a long period of time?" This last question might be posed much more frequently in this day and age, following the recent and present situation of highly educated people facing extended unemployment despite their best efforts. The trauma of the recent economic "Great Recession" (or "not-so-great Depression", as others have termed it) should have taught us to save more given the unanticipated setbacks that may strike in the future; however, recent surveys and news reports indicate a general return to complacency and perhaps excessive spending. If this assessment is accurate, we may expect to pay the price as the effects of the next recession are magnified due to current poor financial planning.