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Finance Final

QuestionAnswer
Finance Everything in your life that involves money.
Personal Financial Planning Arranging to spend, save, and invest money to live comfortably, have financial security, and acheive goals.
Goals Things you want to accomplish.
Benefits of Planning -More money and financial security -Know how to use money effectively to achieve your goals -Less chance of going into debt -Help someone in need
Step 1/6 in the Financial Planning Process Determine your current financial situation. -Make a list of finance related items: Savings, Monthly Income, Monthly Expenses, Debts
Step 2/6 in the Financial Planning Process Develop your financial goals -To develop clear goals, understand the difference between needs and wants, think about your attitude towards money and ask yourself some questions "Do your values affect financial decisions?"
Step 3/6 in the Financial Planning Process Identify your options. Know all your options but remember that you cost could outweigh your decisions.
Step 4/6 in the Financial Planning Process Evaluate your alternatives: Consider the risks of each decision. Keep up with social and economic conditions. Understand the risks.
Step 5/6 in the Financial Planning Process Create and use your financial plan
Step 6/6 in the Financial Planning Process Review and Revise your plan often
Economic Factors The economy consists of the ways in which people make, distribute, and use their goods and services.
Market Forces Consists of the forces of supply and demand which determine the prices of products or goods and services that you purchase
Consumer Prices measures teh value of a dollar and changes in inflation- if consumer prices increase faster than wages, the value of the dollar decreases
Consumer Spending Demand for goods and services by individuals and households
Interest Rates Cost of money, cost of credit when you borrow ,and the return on your money when you save or invest
Two factors that influence your planning for financial goals 1: the time frame in which you achieve your goals 2: the type of financial need that inspires your goals
Time Frame Short term: a year or less Intermediate: two to five years Long Term: Takes over five years
Service a task that a person or machine performs for you
Good a tangible item that is produced and can be weighed or measured
Consumable Goods purchases you make often and use up quickly- food or shampoo
Durable Goods expensive items that you do not purchase often- washing machines, cars, usually last 3 or more years
Intangible Items Cannot be touched, but are often important to your well being and happiness- personal relationships, health, education, and free time
Guidelines to set goals 1: your financial goals should be realistic 2: your goals should be specific 3: Your goals should have a clear time frame 4: they should help you decide what action to take
Time Value of Money The increase of an amount of money due to earned interests or dividends.
Foundation of planning obtain financial resources by working, making investments, or owning property.
Plan you need to plan how you will spend you money
Spend Wisely Don't spend more that you can afford or have available
Save Long-term financial security starts with a savings plan
Borrow Wisely Only do so when necessary
Manage Risk to protect your resources in case you are ever seriously injured
Plan for retirement Plan about what age you want to stop woring
Money Management Planning how to get the most from your money. good money manaagement can help you makr your money go farther
Financial Trade-Offs Could include considering whether to spend yur paycheck on new clothes or put it in the bank.
To make sure that you become a better judge of trade-offs... Consider how your values, goals, and bank account statement play into your choice
The first step in effective money management To organize your personal financial documents. -Bank statements, paycheck stubs, reciepts for everything
Personal Financial Documents also include... car ownership titles, birth certificate, tax forms, SS card
Organizing helps you... -Plan and measure your financial progress -Handle routine money mattersm (Bills on time) -Determine how much money you have now and will have in the future -Make effective decisions on how to save money
Personal Finance Statement (PFS) a document that provides info about an individual's current financial postition and presents a summary of income and spending
PFS can help you... -Determine what you own and owe Measure your progress toward your financial goals -Track your financial activities
To evaluate your financial situation make a balance sheet
Balance Sheet A financial statement that lists items of value owned and debts owed. It's also your net worth statement- a measure of your current financial situation
Step 1 Determine your assets
Assets any item of value that an individual or company owns. including cash, property, personal possesions, and investments. To determine your assets, consider the four categories of wealth
Wealth an abundance of valuable material possesions or resources.
4 categories of wealth Liquid Assets, Real Estate, Personal Possesions, Investment Assets
Created by: ChloeGiselle