Transcript Chapter 12 Money Management Strategy What

Glencoe Business and Personal Finance
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Chapter
Money Management Strategy
12
What money management techniques can
you employ to achieve your future
financial goals?
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Chapter
Money Management Strategy
12
Organizing and maintaining a personal financial plan are
essential to budgeting for future financial goals.
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Chapter
Money Management Strategy
12
money management
safe-deposit box
personal financial
statement
net worth
assets
wealth
liquid assets
real estate
market value
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liabilities
insolvency
cash flow
income
take-home pay
discretionary income
surplus
deficit
budget
budget variance
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Chapter
Money Management Strategy
12
Glencoe Business and Personal Finance
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Chapter
12
Money Management Strategy
Section 1 Organizing Financial Records
Discuss the relationship between opportunity costs and money
management.
Explain the benefits of keeping financial records and
documents.
Describe a system to maintain personal financial documents.
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Chapter
12
Money Management Strategy
Section 1 Organizing Financial Records
Organization of Financial Documents
Financial Documents
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Pay Stubs
Automobile
Titles
Bank Statements
Birth
Certificates
Broker Reports
Marriage
License
Credit Card
Statements
Tax Forms
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Chapter
12
Money Management Strategy
Section 1 Organizing Financial Records
Organization of Financial Documents
What can an organized system do for you?
Determine your current financial status.
Pay your bills on time.
Complete required tax reports.
Plan for the future.
Make sound financial decisions related to investments.
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Chapter
12
Money Management Strategy
Section 1 Organizing Financial Records
Storing Financial Documents
Home Files
Safe-Deposit Box
Home Computers
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Chapter
12
Money Management Strategy
Section 1 Organizing Financial Records
How are the roles of maintaining financial records and
managing opportunity costs in a sound financial plan similar
and different?
Managing opportunity costs and maintaining financial records
are both critical to a sound financial plan. Making sound
financial decisions to get the most out of your money is an
important step. In order to make and track these decisions
you need to maintain financial records to keep track of your
money and determine your financial position.
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Balance Sheet
Assets
–
–
–
–
Liquid
Real Estate
Personal Possessions
Investments
Liabilities
– Current
– Long-term
The difference is Net Worth (assets minus liabilities)
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Chapter
12
Money Management Strategy
Section 2 Personal Financial Statements
Personal Balance Sheet
Reduce Expenses
How to
Increase
Your Net
Worth
Reduce Spending and Debts
Increase Your Savings
Increase Your Investments
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Cash Flow
Income
Expenses
– Variable
– Fixed
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Cash Flow Statement Steps:
1. Record all your sources of income.
2. Record all your expenses.
3. Calculate your net cash flow.
Glencoe Business and Personal Finance
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Chapter
12
Money Management Strategy
Section 2 Personal Financial Statements
Describe a personal balance sheet and cash flow statement.
Develop a personal balance sheet and cash flow statement.
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Chapter
12
Money Management Strategy
Section 2 Personal Financial Statements
How are a personal balance sheet and cash flow statement
similar? How are they different? What role does each play in the
development of a personal financial plan?
A cash flow statement and a personal balance sheet both
list expenses/liabilities and provide a snapshot of your
financial situation. However, a cash flow statement does
not break down all of your liabilities. It focuses on your
monthly payments. A personal balance sheet does not
show your income only the balance in your accounts.
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Chapter
12
Money Management Strategy
Section 3 Budgeting for Financial Goals
Identify the steps to create a personal budget.
Discuss the advantages of increasing your savings.
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Chapter
12
Money Management Strategy
Section 3 Budgeting for Financial Goals
Preparing a Budget
Steps to
Developing a
Budget
7. Review Spending and Saving Patterns
6. Record What You Spend
5. Budget for Variable Expenses
4. Budget for Fixed Expenses
3. Budget for Unexpected Expenses
2. Estimate Your Income
1. Set Your Financial Goals
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Chapter
12
Money Management Strategy
Section 3 Budgeting for Financial Goals
A Successful Budget
Characteristics of an Effective Budget
Carefully
Planned
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Practical
Flexible
Easily
Accessible
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Chapter
12
Money Management Strategy
Section 3 Budgeting for Financial Goals
Increasing Your Savings
Savings Strategies
Pay
Yourself First
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Use Payroll
Savings
Spend
Less
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Chapter
12
Money Management Strategy
Section 3 Budgeting for Financial Goals
Explain why it is sometimes difficult for people to increase
their savings. How will increasing the amount you put in
savings affect your budget?
It is difficult to resist the temptation to spend any extra money
each month. If you increase your savings you may need to adjust
spending in another area such as your variable expenses.
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Chapter
Money Management Strategy
12
Balance of Trade
Balance of trade is determined
by subtracting total imports
from total exports over a period
of time.
What could a surplus in the
balance of trade mean?
Strong
Manufacturing Base
High Tariffs
Overseas Demand for
U.S. Products
Less Disposable Income for
Consumers
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Chapter
Money Management Strategy
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Glencoe Business and Personal Finance
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Chapter
Money Management Strategy
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