1. Section 3.2 Personal Financial Statements
Personal Finance
Section 3.2
Personal Financial Statements

2. Objectives Create a Personal Balance Sheet
Create a Cash Flow Statement

3. What are you worth?
Personal Financial Statement: Documents that provide information about your current financial position
Balance Sheet: Lists the items of value you own, your debts and net worth
Net worth: Difference between what you own and owe

4. Personal Financial Statements Can Help You:
Determine what you own and what you owe
Measure your progress toward your financial goals
Track your financial activities
Organize information that you can use when you file your tax return or apply for credit

5. STEP 1 Determine Your assets:
Liquid (Cash & items that can be converted to cash fast)
Real Estate: Market Value
Personal Possessions: Example, Jewelry
Investments

6. STEP 2 Determine Your liabilities:
Current Liabilities: Short term debt paid within one year
Examples: Med bills, cash loans, taxes
Long term: Not paid within one year
Examples: Mortgage, car payments

7. STEPS 3 and 4 3. Calculate Your Net Worth
Insolvency: Liabilities are greater than your assets
4. Evaluate: What changes can I make?

9. How to Increase Your Net Worth
Reduce Expenses
How to Increase Your Net Worth
Reduce Spending and Debts
Increase Your Savings
Increase Your Investments

10. Discretionary Income
The money left over after a person has paid for the essentials – food, clothing, shelter, transportation, and medication

11. Create Cash Flow
Cash Flow: Money that goes into and out of your wallet
Step 1: Record your income: Take home pay- Money after taxes
Step 2: Record Expenses: Variable and Fixed
Step 3: Determine Cash Flow

12. Surplus
Extra money that can be spent or saved, depending on a person’s financial goals and values

13. Deficit
The situation that occurs if a person spends more than he or she earns or receives

14. Various Financial Ratios

15. Cash Flow Statement

16. Class Work for Today Hand in For A Grade
Create a Personal Balance Sheet (Use p.69 and notes as a guide)
Create a Cash Flow Statement (Use p. 71 and notes as a guide)
Hand in For A Grade

17. 3.2 Assessment Questions
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