Managing Personal Finances 14-1
Chapter Objectives 14-2 1. Where Does Your Money Go? 2. Financial Planning 3. Time Is Money 4. The Financial Planning Process 5. A House Is Not a Piggy Bank: A few Lessons from the Subprime Crisis 6. Evaluate Job Offers 7. Saving and Investing
Before Buying on Credit 14-3 1) Do I really need the goods or services? 2) Can I afford them? 3) Am I willing to pay interest on the purchase?
Evaluation of Your Credit Risk 14-4 Creditors provide information on your / habits Three national credit bureaus compile score FICO criteria Payment owed of credit history Amount of new credit of credit www.annualcreditreport.com
To Improve Credit Score 14-5 Get credit card Small purchases Payoff on time Scan credit report for errors National Foundation for Credit Counseling- Welcome to NFCC!
Cost of Borrowing 14-6 $ charge $ Annual $ Over- fee $ payment fee $ Cash advance fee
14-7 Debit Card pulls money out of your checking account whenever you use the card to buy something or get cash from an ATM.
Steps To Get Out Of Debt 14-8 1. Cut up credit cards- live on cash-only 2. Reduce monthly bills
Exercises 14-9 Keep written record Keep ATM receipts Take $100 out of bank Avoid gourmet coffee shops
Additional Exercises 14-10 Credit cards in drawer Take lunch to work But only groceries and gas Use coupons
14-11 Personal Finance application of principles of finance to the monetary decisions... for your individual benefit or...family...
14-12 Financial Planning the on-going process of managing your personal finances... to meet goals that you ve set for yourself or your family.
Questions for Financial 14-13 Planning Annual Income? Debt and payments? Value of assets? Annual budget? Wealth accumulation? Money for retirement?
Financial Planning Life Cycle 14-14
Education and Average Income 14-15 High school $20,873 High school $31,071 degree $56,788 degree $82,320
Fastest Growing Jobs 14-16 Network Systems and Communication Analysts Personal and Home Care Aids Software Engineers Personal Financial Advisors
Funding Sources for College Education 14-17 Scholarships Grants Education Loans Work-Study
Steps to Getting a Job Offer 14-18 Resume Cover letter Create company list General search Interview
Evaluating Job Offer 14-19 Salary Opportunity Quality of Life Benefits Health Insurance Disability Insurance Flexible Spending Account Retirement Plan
14-20 Compounding refers to the effect of earning interest on your interest.
14-21 Time Value of Money a dollar received in the is worth more than a dollar received in the.
Steps in Financial Planning 14-22 1) Evaluate Current Financial Status 2) Set Financial Goals 3) Use a Budget and Compare Actual with Budget
Current Financial Statement 14-23 Personal Net Worth Statement Cash Flow Statement
Personal Net Worth Statement 14-24
Cash Flow Statement 14-25
Financial Goals 14-26 Short-Term Intermediate-Term Long-Term
Well-Conceived Goals 14-27 Realistic Measurable Definite Time Frames Specific Courses of Action
Joe s Financial Goals 14-28
Joe s Budget 14-29
Develop Budget and Evaluate Performance 14-30 Wages Student loan Pay off credit cards Actual v. Budget- Variance
Three-Level Goals/Plans 14-31
U.S. Savings Rate 14-32
Risky Mortgages 14-33 $ Subprime- made to borrowers who don t qualify for market-set interest rates $ Adjustable Rate Mortgages (ARM)- pegged to increase or decrease of certain interest rates
Lessons from Subprime Crisis 14-34 & & & All are not created equal It s risky out there risk risk Risk Not all income is equally