Topic 4 – Allocating Your Money Wealth Management 2010

Determine Your Personal Net Worth Definitions: assets, liabilities, net worth Identify personal assets Identify personal liabilities Calculation of personal net worth Knowing personal net worth can be beneficial Prepare personal net worth statement Assets – things you own; cash, furniture, bikes, DVDs, machinery, land, houses, cars, etc. Liabilities – things you owe; home mortgage, car loan, college loan, credit card balance, etc. Personal Net Worth – assets – liabilities.

How to Go Broke Like a Rock Star Who do you think is the wealthiest rock star? What makes him/her the wealthiest? Is the rock star who made the most money this year necessarily the person who is the wealthiest? Why or why not? How could a rock star who sells out concerts and is at the top of the charts go bankrupt?

The NFL and VISA© Financial Football Revenues Assets Liabilities Expenses Activity Handout – Module 1

Develop a Personal Budget Definitions: personal budget, income, expenses Common personal income and expenses Distinguish between fixed and variable expenses Importance of a personal budget Steps for developing a personal budget Tracking and analysis Personal budget – a sum of money allocated for a personal reason; a summary of expenses for personal reasons. Income – the amount of money received from working; the financial gain (earned or unearned) accruing over a given period of time. Expenses – outflow of money to pay for goods and services.

Steps to Develop a Budget Calculate how much income you bring home each month Determine what your spending habits are Decide what are most important to pay each month and set money aside for them Set aside 10% of your income for savings Take your budget seriously

Tracking and Analysis Answer these questions monthly: Does your budget include all costs expenses? Are the costs fixed, variable, or one time? Were there any unexpected emergencies that required an outflow of money? Are there costs that could be cut? Calculate what you earned and what you spent to see how close to your budget you ended up Adjust your budget as needed

Activity