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Money Management and Financial Planning

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Presentation on theme: "Money Management and Financial Planning"— Presentation transcript:

1 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

2 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

3 Key Terms money management personal assets net worth
cash flow statement Chapter 16

4 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

5 SUCCESSFUL MONEY MANAGERS
Set goals Make wise decisions Buy wisely Live within their income Chapter 16

6 >> C H E C K P O I N T What are some characteristics of a wise money manager? Chapter 16

7 PERSONAL BALANCE SHEET
Assets Liabilities Net Worth Chapter 16

8 SAMPLE PERSONAL BALANCE SHEET
Chapter 16

9 >> C H E C K P O I N T What are three main categories of a personal balance sheet? Chapter 16

10 PERSONAL CASH FLOW STATEMENT
Cash inflows Cash outflows Compare inflows and outflows Chapter 16

11 SAMPLE PERSONAL CASH FLOW STATEMENT
Chapter 16

12 >> C H E C K P O I N T What do cash outflows represent?
Chapter 16

13 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

14 Key Terms fixed expenses variable expenses allowance budget variance
Chapter 16

15 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

16 >> C H E C K P O I N T What are the main purposes of a budget?
Chapter 16

17 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

18 SAMPLE FAMILY BUDGET Chapter 16

19 >> C H E C K P O I N T What are eight commonly used budget categories? Chapter 16

20 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

21 BUDGETING FORMATS Software program Handwritten Checkbook Unwritten
Chapter 16

22 SAMPLE INCOME AND EXPENSE RECORD
Chapter 16

23 >> C H E C K P O I N T What are five characteristics of an effective budget? Chapter 16

24 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

25 Key Terms financial plan individual retirement account (IRA)
estate planning Chapter 16

26 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

27 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

28 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

29 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

30 FINANCIAL LIFE CYCLE Teen years Twenties Later Retirement Chapter 16

31 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

32 >> C H E C K P O I N T List five recommended steps for financial planning. Chapter 16

33 IMPLEMENT A FINANCIAL PLAN
Insure current income Disability income insurance Unemployment insurance Plan for future income Social Security Pensions Retirement accounts Annuities Chapter 16

34 >> C H E C K P O I N T What are common sources of income during retirement? Chapter 16

35 REVIEW YOUR FINANCIAL PLAN
Revise financial goals Review financial activities Remember to save Chapter 16

36 >> 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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