5 Money ManagementDay-to-day financial activities necessary to get the most from your money.Money trade-offs
6 Financial DocumentsFirst step in effective money management is to organize your financial documents.Benefits:Financial statusPay your bills on timeTax reportsFuture planningInvesting 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 documentMaintain filing discipline
8 Safe-Deposit BoxA 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 AssetsStep 2: Determine LiabilitiesStep 3: Calculate Net WorthStep 4: Evaluate Financial SituationPg. 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 cashYour liquid assets are worth $872
13 Determine Liabilities Current (short term debt) - paid within one yearLong-term – Debts that require a longer term of repaymentInsolvency – the inability to pay debt when it’s due
21 BudgetA plan for spending and investing your money to meet your wants and needs.Step 1: Set your financial goalsStep 2: Estimate your incomeStep 3: Budget for unexpected expensesStep 4: Budget for fixed expensesStep 5: Budget for variable expensesStep 6: Record spending
22 Budget VarianceThe difference between the budget and the actual amount spent.