chapter 28 managing personal finances. warm up log on open microsoft word today, we will start...
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Chapter 28
Managing Personal Finances
Warm Up
• Log on• Open Microsoft Word
• Today, we will start Chapter 28 on Managing Personal Finances
Vocabulary
• Personal Financial Planning
• Goals• Opportunity Cost• Money management• Expense • Budget• Gross pay• Deductions• Net pay
• Income • Fixed expenses• Variable expenses• Budget variance• Surplus• Deficit
Making Financial Decisions
• Personal finance refers to all the things in
your __________ that involve money.
• Everyone has ___________ financial goals.
• The financial process has ______ steps.
Financial Planning Process
1. Determining Your Financial Situation2. Developing Your Financial Goals3. Identify Possible Courses of Action4. Evaluate Your Alternatives5. Implement a Financial Plan of Action6. Review and Revise Your Plan
Step 1: Determining Your Financial Situation
1. First, make a list of your ____________, monthly income, monthly expenses and __________.
2. A good way to estimate your expenses is to keep a careful ___________ of every amount you spend for one month.
Step 2:Developing Your Financial Goals
1. Think about your attitude towards __________.
2. What are your __________ and needs?
Step 3:Identify Possible Courses of Action
1. It is important to consider your options before making a decision.
Step 4:Evaluate Your Alternatives
1. Look at where you are in your _______, your present financial situation, and your personal values.
2. Consider the consequences and _______ of each decision you make.
Step 5:Implement a Financial Plan of Action
1. A plan of action is a list of ________ to achieve your financial goals.
Step 6:Review and Revise Your Plan
1. As you get _________, your finances and needs will change.
2. You should reevaluate and revise it every year.
Sources of Financial Information
• The ____________ is a good place to get information on social and economic conditions.
• Magazines can also help.
Understanding Risk
a) Inflation Riska) A __________ increase in the cost of goods
and services.
b) Interest Rate Riska) Interest rates ________ and fall.
c) Income Riska) Your __________ may rise or fall.
Understanding Risk
d) Personal Riskd) Some choices ____________ risk.
e) Liquidity Riskd) The ability to convert your financial resources
into cash easily without a loss in value.
Understanding Risk
f) An important part of financial planning is ________________ which risks you can afford to take and which ones you can’t.
g) ________________ of your assets is another way to minimize risk.
Consequences of Choices
• Choosing between the _____________ involves more than just knowing what you forgo.
• It also involves knowing what you ________.
Section 28.1 Review Key Concepts
1. What are some examples of long-range financial goals that consumers may have?
2. List the steps of the financial planning process.
3. Name some types of financial risk.
Warm Up
• Grab your binder• Log on• Open your Ch 28 Notes from yesterday.
The Importance of Budgeting
• Money ______________ is necessary for consumers, businesses and governments.
• Most people want more goods and services than they have _________ to buy.
• A budget helps them to set ______________ priorities.
The Importance of Budgeting
• A budget includes a record of your expected income, your planned expenses, and your planned savings over a certain period of __________.
• A good budget helps people set priorities for spending and saving and ___________ their money.
Preparing a Budget
• Planning a budget is a ______________-step process.
• Step 1: Set Your ___________ Goals1. A budget should help you decide which goals
you can_____________________ with the amount of money you have.
• Step 2: _____________ Your Income1. Start by recording your estimated income
for the next ________________.2. Include all sources of income that you
know you will ______________, such as take home pay and income on investments.
Preparing a Budget
• Step 3: Budget for Unexpected Expenses and Savings1. You have to plan for _____________ such
as food, rent, and clothing to satisfy your basic needs.
2. An expense is an amount of money used to _____________ or do something.
Preparing a Budget
3. You must also plan for ____________ expenses, such as medical visits or accidents.
4. Unexpected expenses could also include rises in __________ for items.
5. When you develop your budget, make sure that the ____________ income figure is the same as the total for ________ expenses and savings.
Preparing a Budget
• Step 4: Budget for Fixed Expenses1. The amount of a fixed expense might
sometimes change, but it is usually about the ___________ over long periods.
Preparing a Budget
• Step 5: Budget for Variable Expenses1. The amounts for these expenses usually
_____________ from month to month.
Preparing a Budget
• Step 6: Record What You Spend1. To find out how ___________ your
budget is, you will need to keep track of your expenses during one month and revise your budget if _______________.
Preparing a Budget
• Step 7: Review Spending and Saving Patterns1. Budgeting is a continual ______________.2. You need to review your budget each
________ and consider making __________.
Preparing a Budget
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