1. 16 Money Management and Financial Planning
C H A P T E R 16
Money Management and Financial Planning
16-1 Personal Financial Statements
16-2 Budgeting Techniques
16-3 Taxes in Your Life
16-4 Your Financial Future

2. KEY TERMS
money management- the daily financial activities that meet the wants and needs of a person with a limited income.
personal assets- anything of financial value
liabilities- debt- anything you owe
net worth- personal assets minus personal liabilities
cash flow statement- the monthly inflow of income versus the outflow of expenses

3. SUCCESSFUL MONEY MANAGERS
Set goals
Make wise decisions
Buy wisely
Live within their income

4. PERSONAL BALANCE SHEET
Assets
Liabilities
Net Worth

5. PERSONAL CASH FLOW STATEMENT
Cash inflows
Cash outflows
Compare inflows and outflows

6. 16-2 Budgeting Techniques
CHAPTER 16
16-2 Budgeting Techniques
4/16/2017
Goal 1 Identify purposes of a budget.
Goal 2 Describe steps for preparing a budget.
Goal 3 Describe characteristics of successful budgeting.

7. THE BUDGET PROCESS Set financial goals Plan budget categories
Maintain financial records
Evaluate your budget
BUDGET CATEGORIES
Savings
Food
Clothing
Household
Transportation
Health and personal care
Recreation and education
Gifts and contributions

8. KEY TERMS
fixed expenses- monthly expenses that do not change from month to month
(example- rent or house payment)
variable expenses- monthly expenses that change from month to month
(example- electricity bill, grocery bills)
allowance- the amount of money you plan to use for a certain budget category
budget variance- the changes from month to month of income or expenses

9. SAMPLE FAMILY BUDGET FOR ONE MONTH

10. 16-3 Taxes in Your Life
Goal 1 Identify the types of taxes paid by consumers.
Goal 2 Describe the steps when filing a federal income tax return.
Goal 3 Explain tax-assistance sources.
Goal 4 Identify common tax-planning strategies.

11. TAXES
Taxes- a charge imposed by a government to finance public services
4 AREAS OF TAXATION
Taxes on purchases
Taxes on property
Taxes on wealth
Taxes on earnings

12. PREPARING THE FEDERAL INCOME TAX RETURN
Step 1: Determine gross income
Step 2: Calculate adjusted gross income
Step 3: Subtract deductions
Step 4: Determine exemptions
Step 5: Compute taxable income
Step 6: Taxes owed
Step 7: Make tax payments or ask for a refund or credit

13. Income & Deductions Earned Income- Wages from a job
Investment Income- Income from investments such as stocks, bond, and mutual funds.
Tax Deductions- Items you can write off from your taxes (example- child care)

14. 16-4 Your Financial Future
Goal 1 Describe the financial planning process.
Goal 2 Explain actions for implementing a financial plan.
Goal 3 Identify actions for reviewing a financial plan.

15. KEY TERMS
financial plan- a report that summarizes your current financial condition while preparing for future expenses.
individual retirement account (IRA)- an account set up for retirement that has tax benefits (tax deferred or tax free earnings)

16. DEVOLPING A FINANCIAL PLAN
A financial plan is a report that
Summarizes your current financial condition
Acknowledges your financial needs
Sets a direction for your future financial activities
Financial planning includes
Evaluating one’s financial position
Setting financial goals
Guiding activities and resources toward reaching those goals

17. FINANCIAL PLANNING PROCESS
1. Analyze your current financial condition
2. Develop financial goals that are responsive to your vision
3. Create your financial plan
4. Implement the plan
5. Revise your financial plan

18. PERSONAL FINANCIAL FILING SYSTEM

19. USING A FINANCIAL PLANNER
Questions to ask when choosing a financial planner:
What experience and training do you have?
Are you willing to supply references from past clients?
How are your fees determined?

20. REVIEW YOUR FINANCIAL PLAN
Revise financial goals
Review financial activities
Remember to save and share