© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 1 Personal Finance: Getting Set for Life

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 2 A Relationship with Money PositiveNegative Starting Early Improving Financial Well-Being Improving Financial Well-Being Taking on Heavy Debt Loads Taking on Heavy Debt Loads Living Paycheck-to-Paycheck Living Paycheck-to-Paycheck

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 3 Three Financial Lessons Money Value Always Changes Small Early Sacrifices Pay Off Decisions Involve Trade-Offs

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 4 The Value of Money Changes Inflation Buying Power Time Value of Money Magic of Compounding

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 5 Small Sacrifices Can Pay Off Transportation Housing Wardrobe Entertainment

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 6 Financial Decisions Involve Trade-Offs DelayedGratificationDelayedGratification Risks Versus Rewards Rewards

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 7 Creating a Financial Plan Where Did my Money Go? Manage Your Finances Manage Your Finances Identify Major Life Expenses Identify Major Life Expenses Gain Financial Independence Gain Financial Independence Fee-Based Financial Planners Commission-Based Financial Planners

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 8 The Financial Planning Process 1.Figure out where you are now 2.Set realistic financial goals 3.Create and implement a plan 4.Periodically measure your progress 5.Adjust goals and plans as needed

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 9 Figure Out Where You Are Now Balance Sheet Income Statement TotalExpensesTotalIncomeTotalLiabilitiesTotalAssets

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 10 Set Financial Goals SpecificSpecificRealisticRealistic AttainableAttainableReasonableReasonableHardNumbersHardNumbersGeneralDesireGeneralDesire Short-TermMedium-TermLong-Term

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 11 Create and Implement a Plan Earn More Spend Less Choose Wisely

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 12 Measure Your Progress Income and Expenses Larger Assets Investment Portfolio

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 13 Adjust Goals and Plans Building a Financial Foundation Building Net Worth and Preparing for Expenses Getting Through College Planning for Retirement

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 14 Stage 1: Getting Through College Be Sure to Graduate Increased Earnings More Opportunities Avoid Credit Card Debt Essential Items Non-Essential Items

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 15 Life Stage 2: Building a Foundation Update Financial Plan Control Expenses Congratulate Yourself

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 16 Important Financial Decisions Housing Earning Power Earning Power Earning Power Earning Power Cash and Credit Cash and Credit Cash and Credit Cash and Credit Transportation

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 17 Paying for Transportation True Ownership Cost Financing Maintenance Insurance Depreciation

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 18 Paying for Housing Buying a HomeRenting a Home Appreciation in Value Mortgage DeductionIncreased Flexibility No Closing Costs

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 19 Maximizing Earning Power Know what you’re worth Articulate your value Pursue benefits and incentives Learn company salary structure Study top performers

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 20 Managing Cash CheckingAccount Money Market Mutual Fund SavingsAccount Asset Management Account Money Market Account Certificate of Deposit

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 21 Managing Credit Credit History Credit Bureau Credit Report Credit Card

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 22 Personal Bankruptcy Credit Counseling Debt-Management Chapter 7 Chapter 13

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 23 Stage 3: Building Net Worth and Preparing for Expenses Investments Investments Taxes Taxes Insurance Insurance Education Education Emergencies Emergencies

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 24 Successful Investments Keep short term cash reserves Evaluate all investments Don’t invest on emotion Understand the risks Be skeptical of guaranteed results Diversity your investments

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 25 Minimizing Taxes Reduce Consumption Reduce Taxable Income Use Tax Credits

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 26 Obtaining Insurance Life and Health AutomobileAutomobile Home Owners’

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 27 Stage 4: Planning for Retirement Care-Free Time? Financial Struggle? Medial Costs Medial Costs Stock Market Stock Market Company Pensions Company Pensions Social Security Social Security

© Prentice Hall, 2007Excellence in Business, 3eAppendix C - 28 Retirement Misconceptions Living expenses will drop Retirement will last for about 15 years Social security will cover the basics Employers will provide pension and health insurance Saving a small amount is useless I have plenty of time