1. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 22-1 ChapterTwenty-Two Managing Personal Finances: Who Wants to Be a Millionaire?

2. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 22-2 Controlling Assets 1.Take Inventory 2.Track Expenses 3.Prepare Budget 4.Payoff Debts 5.Start Saving 6.Borrow Only To Increase Value

3. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 22-3 How to Figure Your Net Worth  List everything your own  Note present market value  Total assets  List all creditors  Total liabilities  Subtract liabilities from assets

4. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 22-4 Savings Account Vs. Mutual Fund (Figure 22.5)

5. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 22-5 Consumer Credit Cards Convenience Convenience Financial Emergencies Financial Emergencies Purchase Goods Immediately Purchase Goods Immediately Track Purchases Track Purchases Safer Than Carrying Cash Safer Than Carrying Cash  Temptation to Overspend  Items Become More Expensive  Danger of Excessive Debt  Tie Up Future Income  Missed Payments Lead to Poor Credit Ratings  High Interest Rates & Annual Fees AdvantagesDisadvantages

6. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 22-6 What to Consider When Choosing a Credit Card $Find a card with a low interest rate $Compare the yearly charges $Check for special fees or penalty payments $Some cards earn you money $Choose a card that charges your interest on your “balance due”, not on your “average daily balance” $Choose a card that has a “grace period” $Don’t let gift offers & discounts confuse you Source: 10 Awesome Facts About Money (and life!), Reliastar.

7. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 22-7 Building a Capital Account  Create/Apply Strategy  Real Estate- Safe  Taxes & Home Ownership  Savings  Manage Credit  Life Insurance  Health Insurance  Homeowner’s or Renter’s Insurance  Other

8. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 22-8 Five “C’s” of Credit C haracter C apacity C apital C onditions C ollateral

9. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 22-9 Life Insurance  Term  Whole Life  Variable Life

10. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 22-10 Retirement???  Social Security  Individual Retirement Account (IRA)  Simple IRA  401(K) Plan  Keogh Plan  Financial Planners

11. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 22-11 Where IRA Money Is Invested Source: Source: Employee Benefits Research Institute In Billions of Dollars

12. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 22-12 Major Sources of Financial Advice Friend/Family Member Friend/Family Member Financial Planner Financial Planner Financial Publication Financial Publication Broker Broker Banker Banker Attorney Attorney Insurance Agent Insurance Agent

13. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 22-13 Where Do People Go If They Inherit Money? Source: Source: Wall Street Journal