Finance Final
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| Finance | Everything in your life that involves money.
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| Personal Financial Planning | Arranging to spend, save, and invest money to live comfortably, have financial security, and acheive goals.
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| Goals | Things you want to accomplish.
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| 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
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| 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
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| 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?"
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| Step 3/6 in the Financial Planning Process | Identify your options. Know all your options but remember that you cost could outweigh your decisions.
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| 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.
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| Step 5/6 in the Financial Planning Process | Create and use your financial plan
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| Step 6/6 in the Financial Planning Process | Review and Revise your plan often
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| Economic Factors | The economy consists of the ways in which people make, distribute, and use their goods and services.
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| Market Forces | Consists of the forces of supply and demand which determine the prices of products or goods and services that you purchase
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| 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
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| Consumer Spending | Demand for goods and services by individuals and households
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| Interest Rates | Cost of money, cost of credit when you borrow ,and the return on your money when you save or invest
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| 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
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| Time Frame | Short term: a year or less Intermediate: two to five years Long Term: Takes over five years
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| Service | a task that a person or machine performs for you
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| Good | a tangible item that is produced and can be weighed or measured
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| Consumable Goods | purchases you make often and use up quickly- food or shampoo
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| Durable Goods | expensive items that you do not purchase often- washing machines, cars, usually last 3 or more years
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| Intangible Items | Cannot be touched, but are often important to your well being and happiness- personal relationships, health, education, and free time
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| 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
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| Time Value of Money | The increase of an amount of money due to earned interests or dividends.
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| Foundation of planning | obtain financial resources by working, making investments, or owning property.
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| Plan | you need to plan how you will spend you money
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| Spend Wisely | Don't spend more that you can afford or have available
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| Save | Long-term financial security starts with a savings plan
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| Borrow Wisely | Only do so when necessary
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| Manage Risk | to protect your resources in case you are ever seriously injured
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| Plan for retirement | Plan about what age you want to stop woring
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| Money Management | Planning how to get the most from your money. good money manaagement can help you makr your money go farther
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| Financial Trade-Offs | Could include considering whether to spend yur paycheck on new clothes or put it in the bank.
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| 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
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| The first step in effective money management | To organize your personal financial documents. -Bank statements, paycheck stubs, reciepts for everything
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| Personal Financial Documents also include... | car ownership titles, birth certificate, tax forms, SS card
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| 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
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| Personal Finance Statement (PFS) | a document that provides info about an individual's current financial postition and presents a summary of income and spending
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| PFS can help you... | -Determine what you own and owe Measure your progress toward your financial goals -Track your financial activities
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| To evaluate your financial situation | make a balance sheet
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| 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
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| Step 1 | Determine your assets
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| 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
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| Wealth | an abundance of valuable material possesions or resources.
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| 4 categories of wealth | Liquid Assets, Real Estate, Personal Possesions, Investment Assets
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Created by:
ChloeGiselle
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