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Money Management and Financial Planning
16 Money Management and Financial Planning 16-1 Personal Financial Statements 16-2 Budgeting Techniques 16-3 Your Financial Future
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LESSON 16-1 Personal Financial Statements
Goals Explain the basics of money management. Create a personal balance sheet. Develop a personal cash flow statement. Chapter 16
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Key Terms money management personal assets net worth
cash flow statement Chapter 16
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MONEY MANAGEMENT BASICS
Refers to the day-to-day financial activities associated with using limited income to satisfy your unlimited needs and wants Involves getting the most for your money through careful planning, saving, and spending Involves making and using a plan for spending Chapter 16
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SUCCESSFUL MONEY MANAGERS
Set goals Make wise decisions Buy wisely Live within their income Chapter 16
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>> C H E C K P O I N T What are some characteristics of a wise money manager? Chapter 16
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PERSONAL BALANCE SHEET
Assets Liabilities Net Worth Chapter 16
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SAMPLE PERSONAL BALANCE SHEET
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>> C H E C K P O I N T What are three main categories of a personal balance sheet? Chapter 16
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PERSONAL CASH FLOW STATEMENT
Cash inflows Cash outflows Compare inflows and outflows Chapter 16
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SAMPLE PERSONAL CASH FLOW STATEMENT
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>> C H E C K P O I N T What do cash outflows represent?
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LESSON 16-2 Budgeting Techniques
CHAPTER 16 4/25/2017 LESSON 16-2 Budgeting Techniques Goals Identify purposes of a budget. Describe steps for preparing a budget. Describe characteristics of successful budgeting. Chapter 16
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Key Terms fixed expenses variable expenses allowance budget variance
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BUDGET ACTIVITIES Live within your income Achieve your financial goals
Buy wisely Avoid credit problems Plan for financial emergencies Develop good money management skills Chapter 16
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>> C H E C K P O I N T What are the main purposes of a budget?
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THE BUDGET PROCESS Set financial goals Plan budget categories
Savings Food Clothing Household Transportation Health and personal care Recreation and education Gifts and contributions Maintain financial records Evaluate your budget Chapter 16
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SAMPLE FAMILY BUDGET Chapter 16
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>> C H E C K P O I N T What are eight commonly used budget categories? Chapter 16
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CHARACTERISTICS OF AN EFFECTIVE BUDGET
Must be realistic Should be flexible Should be evaluated regularly Must be well planned and clearly communicated Should have a simple format Chapter 16
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BUDGETING FORMATS Software program Handwritten Checkbook Unwritten
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SAMPLE INCOME AND EXPENSE RECORD
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>> C H E C K P O I N T What are five characteristics of an effective budget? Chapter 16
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LESSON 16-3 Your Financial Future
Goals Describe the financial planning process. Explain actions for implementing a financial plan. Identify actions for reviewing a financial plan. Chapter 16
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Key Terms financial plan individual retirement account (IRA)
estate planning Chapter 16
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ADVANTAGES OF FINANCIAL PLANNING
Your financial uncertainties will be reduced. You will gain more control of your financial activities. Your family and household members will know more in case they need to assume control of your finances. Earning, spending, protecting, and saving your resources will be more systematic. Chapter 16
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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 Chapter 16
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FINANCIAL INVENTORY Careful review of your finances
Personal balance sheet Personal cash flow statement Information about current financial position Income Savings Investments Property Living expenses Insurance Money owed Chapter 16
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PERSONAL FINANCIAL FILING SYSTEM
Personal records Housing records Consumer purchase records Insurance records Money management records Tax records Financial services and credit records Investment, retirement, and estate records Chapter 16
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FINANCIAL LIFE CYCLE Teen years Twenties Later Retirement Chapter 16
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USING A FINANCIAL PLANNER
Questions you might 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? Chapter 16
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>> C H E C K P O I N T List five recommended steps for financial planning. Chapter 16
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IMPLEMENT A FINANCIAL PLAN
Insure current income Disability income insurance Unemployment insurance Plan for future income Social Security Pensions Retirement accounts Annuities Chapter 16
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>> C H E C K P O I N T What are common sources of income during retirement? Chapter 16
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REVIEW YOUR FINANCIAL PLAN
Revise financial goals Review financial activities Remember to save Chapter 16
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>> C H E C K P O I N T What common activities are needed when reviewing a financial plan? Chapter 16
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