1. Money Management Strategies
CHAPTER 5

2. Organizing Financial Records
CHAPTER 5 SECTION 1

3. What financial documents should you keep and organize?

4. What are some ways to organize these documents?

5. Money Management
Day-to-day financial activities necessary to get the most from your money.
Money trade-offs

6. Financial Documents
First step in effective money management is to organize your financial documents.
Benefits:
Financial status
Pay your bills on time
Tax reports
Future planning
Investing decisions

7. Storing Financial Documents
Locate your documents and sort them into categories such as payroll stubs, savings account, checking account, bills, etc.
Label and file each document
Maintain filing discipline

8. Safe-Deposit Box
A small, secure storage compartment that you can rent at a bank.

9. #1 Personal Financial Statements
CHAPTER 5 SECTION 2

10. Personal Balance Sheet
Allows you to have a complete look at your financial situation.
Step 1: Determine Assets
Step 2: Determine Liabilities
Step 3: Calculate Net Worth
Step 4: Evaluate Financial Situation
Pg. 127 in text

11. Determine Assets Liquid Assets Real Estate Assets Personal Possessions
Investment Assets

12. Liquid Assets Cash and items that can quickly be converted to cash.
$800 in a savings account and $72 in cash
Your liquid assets are worth $872

13. Determine Liabilities
Current (short term debt) - paid within one year
Long-term – Debts that require a longer term of repayment
Insolvency – the inability to pay debt when it’s due

14. #2 Cash Flow
CHAPTER 5 SECTION 2

15. Cash Flow Statement
Movement of cash in and out of your wallet and/or bank account.
Step 1: Record your income
Step 2: Record your expenses
Step 3: Calculate your net cash flow
Pg chart

16. The next slide lists several types of accounts
The next slide lists several types of accounts. Categorize each account as belonging to the personal balance sheet or cash flow statement.

17. Take-home pay
Transportation
Checking Account Balance
Groceries
Credit Card Balance
Investment income
Student Loan Payment
Mortgage

18. #3 Your Financial Position
CHAPTER 5 SECTION 2

19. What is your net worth? Deficit – spend more than you earn
Loans make up for deficit – increases liabilities
Surplus – spend less than you earn
Increases net worth
Invest – pay off debts – etc.

20. #4 Preparing a Budget
CHAPTER 5 SECTION 3

21. Budget
A plan for spending and investing your money to meet your wants and needs.
Step 1: Set your financial goals
Step 2: Estimate your income
Step 3: Budget for unexpected expenses
Step 4: Budget for fixed expenses
Step 5: Budget for variable expenses
Step 6: Record spending

22. Budget Variance
The difference between the budget and the actual amount spent.

23. Increasing Your Savings
CHAPTER 5 SECTION 3

24. Increasing Your Savings
Essential component – open a savings account
PAY YOURSELF FIRST!
PAYROLL SAVINGS DEDUCTION
SPENDING LESS TO SAVE