In order to have an efficient and plausible financial plan, one needs to come up with an efficient system that organizes and maintains his or her financial records. The process of keeping the records is vital and requires the used information to be accurate and considers the planning phase, budgeting, as well as tax calculations (Financial Planning Tools, 2006). I filled the worksheet (worksheet 1), with a careful thought of the people who depend on me. I also included details on my addresses and the bank that handles my finances. After filling the worksheet, I was easily able to identify the number of persons, who rely on me. It was important because then I could - start planning effectively the way I should spend my income, with regard to the number of people who depend on it. This was a very vital step in determining my future, in case there will be more people who will start depending on me, or if there will be any changes in my address, employer or even my bank details. All this information was important in ensuring that I had an easy way of managing my income details in the present and in the future.

The daily expenses should then be added up into monthly expenses and eventually into annual expenses (worksheet 2). The same process should be done with income. This worksheet  helped me to ensure that the expenses were made accurately and for everyday life. If this was not properly done, one would expect that there would be many expenses that would not be accounted for. Impulse buying would be reduced by such records. In the course of time, I learnt that I should increase the number of entries for literally everything I daily spend money on, which is not covered in any other area. This would be vital in the determination of total daily expenses.

One also needs to list all the expenses he or she incurs periodically with respect to the income of that period (Financial Planning Tools, 2006). In this case, one needs to come up with the different spheres of life, where he or she spends the money, taking into account the taxes, family, investments, medical uses, home uses, employee benefits, insurance among others. From this worksheet, I included all the expenses that I could incur (worksheet 3). I included all the people who depend on me to ensure that I was thorough and accurate in my total expenses. Though I did not have many expenses from the people who depend on me, I realized that it was important to ensure that I had them included in my expenses, since they could request me to help them in their bills at any time. This information was useful and could help me in future, since I do not have any expense that is not expected or which I can not account for. I also learnt that inclusion of all expenses per periodic time was a very important thing to do at any moment, since it would ensure the exceeding of income. It would also reflect on the expenses that I did not include in my expense list, yet they need to be included.

In order to come up with a perfect personal financial plan, one needs to come up with a balance sheet that determines his or her worth. It would be the only thing, in a manner, that would ensure that all the periodic inflows and outflow of money is put into consideration. If the outflows exceed the periodic inflows (during the same period), one should start to reduce his spending, until he strikes the correct balance. After a thorough evaluation, I learnt that my expenses surpassed my income by a large margin. My income per month was $1285 that added up to $15420 per year. On the other hand, my expenditure was $1720 per month that added up to $20640 per year (worksheet 5). The deficit was $5220 per year and $435 per month. This meant that I was living beyond my means and income. From this assessment, I have learnt that I have to reduce my expenses by more than an average of $37 every day, in order to balance my financial status. I learnt that I needed to check my financial flow carefully to ensure that I had no deficits as the one I had at he moment.

In the recent past, people have used personal financial ratios, in order to evaluate their financial strength. The process is based on the balance sheet and the cash flow statement. In order to determine ones’ financial performance, the ratios are used for a period of time in order to track the performance (Financial Planning Tools, 2006). This way, one is able to determine the progress in determining the success or failure in achieving the set financial goals. Some of the most common ratios that one can use are used in the measurement of liquidity, adequacy of savings and management of debts.

After carrying out my personal evaluation, I realized that I was having a poor cash flow. I was running at a deficit, and this was not healthy at all (worksheet 4). It taught me that I was not credit worthy and I would end up in problems, if I continued having higher expenses than income. I learnt that in future I could be unable to sustain myself or run into necessary debts that would eventually add to my woes. This information was vital in determining the way that I ought to start spending my income.

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