1. “Where Did All the Money Go?”
Financial Statements
“Where Did All the Money Go?”
Southwestern Community College
School of Business and Technology
Frank Paiano – “Paco”
BUS-121, Financial Planning & Money Management
BUS-123, Introduction to Investments
Welcome, Everyone! Thank you for your interest.

2. Money Management Money Management – “How Come We Always Have Too Much
Day-to-day financial activities necessary to manage current personal economic resources while working toward long-term financial security
“How Come We Always Have Too Much
Month at the End of the Money!”

3. Major Money Management Activities
Store and maintain personal financial records and documents
Create personal financial statements
Cash Flow Statement (income vs. expenses)
Net Worth Statement (assets vs. liabilities)
Create and implement a plan for spending and saving (Arrgh! Budgeting!)

4. Successful Budgets Are...
Well planned
Realistic
Flexible
Clearly communicated
Next To Impossible!
Discussion: Does Budgeting ever work?

5. Saving is easier than Budgeting
“Spend Less Than You Earn”
“Live Beneath Your Means”
“Pay Yourself First”
“Make Love, Not Loans!”
Discussion: Is “Pay Yourself First” reasonable?

6. Personal Financial Statements
Net Worth Statement
“A snapshot of your financial situation”
Assets versus Liabilities
a.k.a. Balance Sheet
Cash Flow Statement
“The movie of your financial life”
Income versus Expenses
a.k.a. Income Statement, Budget
Let’s look at each one in detail…

7. Components of a Net Worth Statement (a.k.a. Balance Sheet)
Assets – What You Own
Liquid assets
Real estate
Personal possessions
Investment assets
Liabilities – What You Owe
Short-term liabilities – Examples: credit cards
Long-term liabilities – Examples: car & home loans
Net Worth – What You Have Left Over
Assets minus liabilities

8. Components of a Cash Flow Statement (a.k.a. Income Statement, Budget)
Shows inflow and outflow during a given time period – Income versus Expenses
Record cash inflows
Income from employment
Other sources
Record cash outflows
Fixed and variable expenses
Net cash flow can be a surplus or a deficit
Used as a basis for creating a spending, saving, and investment plan

9. Cash Flow / Net Worth
Let’s start on those financial documents…