My financial status would be best analyzed by a thorough analysis of my cash flows. I would make a proper judgment of the personal financial situation by looking at the financial statements. To put this into perspective, this would entail an analysis of personal cash flow statements and personal balance sheets.
Based on my cash flows, it is a fact that I have a negative cash flow. This means that my rate of spending supersedes the rate of cash inflow. In this case, the cash inflows and out flows are monitored for a specified period, for instance, a year. Capitals from bonds and stocks, incomes, saving interests, and dividends will contribute to the inflows whereas the various costs incurred such as rent, entertainment groceries and many other will make part of the outflows. My case of negative cash flow indicates that net cash flow is leaned towards spending rather than accumulating wealth.
The real picture of the personal property would be shown by the personal balance sheet. All these wealth would be projected by looking at the difference between what I own and what I owe others. The difference still indicates a state of being in debt. The greatest obligation herein, therefore, is to increase the assets or rather to ensure that what I owe others is duly paid. This move would catapult my net worth towards being in a wealthy state as per the economic requirements. Personal balance sheet and personal financial statements
The development of the financial status was done using a tool known as the mint.com. This is an online tool whose sole purpose is to help in the determination of the financial position. This tool is quite easy to use since all that is needed is to upload the information concerning accounts and the financial projectile is obtained real time. However, financial institutions can also be mandated to do this work. For this case, commercial banks are the most charitable financial institution that could be trusted to determine the personal financial status.
Roles of financial institution
The financial institution plays very critical roles in the determination of the personal financial status. An individual's net worth would move towards the negative whenever they lose they are stricken by calamities. Among these calamities is the loss of money. The commercial banks safeguard from such calamities that would lead to lowered net worth. The banks keep money safe to ensure that it is available upon demand of the owner. Moreover, they also keep property safe which makes individual to be sure of the security of the assets. It is a fact that the more secure the assets and finances that one has the more worthy they are financial.
On the contrary, the financial institutions also have a role in giving out loans and other liabilities. It is common for individuals with the negative net worth to look for the possible source of finances as they wait for their sources of income or rather a salary. This surety gives great comfort to people helping to lower the burden of borrowing which otherwise would lead to the rise in the negative net worth. The roles mentioned above would significantly contribute to the improvement of my financial status. The baseline is that with more asset safely kept by the banks and regulated borrowing from the financial institution, my net worth would either stand at zero or be on the active side.
Reasons why people buy financial products
Financial savvy has been lacking for quite so long among most individuals. The impact of this has always been the continuous purchase of commercial products which are not entirely understood. These financial products are bought for a variety of reasons among them being social reasons. To put this into perspective, some people would buy products such as insurance policies simply because one of their relations is the one selling. For this reasons, therefore, they are focused on sealing the social tie rather than the financial gain or loss that would be derived from the purchase.
On the other hand, it is common for business persons to want to feel sophisticated. In an attempt to achieve such complex status, some would settle on buying financial products even when they do not need such products. In this case, the inspiration is to be seen as the best in the business. The reality is that some of the products would prove to be very useful. On the other hand, the greatest challenge is that most of these people do not even understand the complexity of what they are vouching for this, they end up making several mistakes.
Finally, most people buy financial products as a result of the inspiration they get from seeing the same products work out for other people. This is a popular belief that is entirely misleading since people have diverse financial needs. In this case, therefore, everyone needs to settle on for the financial products that apply to their case rather than buying things because they proved successful for other people. It is important to note that lack of comparison would also contribute to people buying certain financial products, in such cases the decisions made are not well informed and might have serious negative repercussions in future.
Main feature of financial products
All financial products intend growing status of individuals. For instance, banks would be useful for saving for the future. Insurance, on the other hand, would be helpful for saving in case of any future misfortunes. The products on investment would prove handy for any individual who would wish to increase their capital at hand. In a nut shell, the overall effect here is to improve the personal financial status. It is therefore important to realize that the financial products are meant to I prove personal financial status. Most important is the realization of the need to do proper research before settling on any of the products to avoid in imminent disappointments.
Effects on the consumers of changes and trend of changes the financial market place
A significant transformation has occurred in the financial sector since the financial providers have indicated a tendency to evolve with the changes in consumers wants. The consumers the financial services providers have been forced to yield to the changes in needs of the users because failure to do so would lead to their face out as the customers would move to firms that would be willing to give them what they want. The new products offered must be branded such that they seem, even though they might not be, transformative to the clients. The new trends have acted as the double edged sword cutting consumers on both sides such that some have experienced tremendous growth in their net worth whereas others have experienced the serious decline in the same an indication of trends affecting consumers based on each case and not as a group.
References
Garman E.T. and Forgue R, R., 2011. Personal finance. Cengage Learning
Kapoor, J.R., Dlabay, L.R. and Hughes, R.J., 2009. Personal finance. Boston, MA: McGraw-Hill Irwin.
Volpe, R.P., Chen, H. and Liu, S., 2006. Analysis of the importance of personal finance topics and the level of knowledge possessed by working adults. Financial services review. 15(1), p.81.
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