personal finance planning
arrange to spend, save, and invest money to live comfortably, have security, and achieve goals
goals
things you want to accomplish
Opportunity cost
require to lose, suffer, or sacrifice
Liquidity
financial cost of another person's losses or injuries
Service
a task a person or a machine performs for you
goods
a physical item that is produced and can be weighted or measured
Economics
study of decisions that go into making, distributing,and using goods and services
economy
the system of production and distribution and consumption
supply
offering goods and services for SALE
demand
the ability and desire to PURCHASE goods and services
Federal Reserve System
central banking organizations of the United States
Inflation
Increase in the level of prices for goods and services
consumer
a person who uses goods or services
interest
the price that is paid for the use of another's money
Time Value of Money
increase of an amount of money due to earned interest or dividends
Principal
the original amount of a debt on which interest is calculated
future value
the amount your original deposit will be worth in the future based on earning a specific interest rate over a specific period of time
Annuity
income from capital investment paid in a series of regular payments
present value
Assigned dollar value that is printed on a stock certificate
Fixed expenses
Remain the same
Variable Expenses
Always Changes
List other possible expenses that are not listed in this worksheet
Rent, A/C, wages
Does Janet have enough money monthly income for monthly expenses?
Janet does have enough money
Explain why utilities are a variable expense?
Because the utilities charge change each month
What ways can this budget be balanced?
Balancing your checkbook
Six steps to create a financial plan?
1. Look at your current financial situation. 2. Make financial goals. 3. Identify options. 4. Evaluate your alternatives. 5. Create and use your financial plan of action. 6. Review and revise your plan
What is the relationship between the timing of your goals and the type of good or service you want?
The financial goals that you set as a student will be different from goals you may have if you marry or have children.
What are 2 econopmic factors that affect financial decision?
Life situation and personal values
How might these factors influence your financial planning?
Might not have the money or goals you want to obtain
Why is it important to distinguish between your needs and wants?
Because a need is something you need to survive and a want is something really not needed to survive
What are the opportunity costs associated with financial decisions?
you have to make a decision with both of them
What is the time value of money?
the value of money with a given amount of interest earned or inflation accrued over a given amount of time
What are the 8 strategies you can apply to achieve your goals?
Obtain, Plan, spend wisely, save, borrow, invest, manage risk, plan for retirement