Transcript personal finance

PERSONAL FINANCE
• Financial planning for individuals. Generally, it
involves analyzing your current financial
position, predicting short-term and long-term
needs, and recommending a financial strategy.
The financial strategy involves setting a
budget and planning for future needs and
wants.
INCOME
• The monetary payment received for goods or services, or
from other sources, such as rent or investments.
• Income is money that literally “comes in” on a regular basis.
For most people, income is something that comes from
getting paid for doing work. Some people, however, are able
to live off from their savings or investments. Income may also
come from gifts or from selling something.
Spending
 to pay out, disburse, or
expend; dispose of (money,
wealth, resources, etc.):
 Money is needed for food,
shelter, and clothing. Of course,
people spend money on things
they want, too.
 Things that we want but do not
need are called luxuries.
 The best way to spend money
wisely is to make a BUDGET,
which is a plan for how much
money will be spent on each
type of item that a person must
buy.
SAVINGS
• One goal of BUDGETING is to save money.
• Savings=money left over after buying what is needed & wanted.
• Saving allows people to plan to buy/pay for something expensive in
the future. (i.e., car, house, vacation, college, etc.)
• Many different ways to save money. EX. Piggy bank, not necessarily
safe.
• Best way of saving money is to put it in a bank. (Short Term)
• By saving in a bank, your money can earn interest ($) and is insured.
This form of interest is money that the bank pays you to use your
money.
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CREDIT
When savings and income are not enough to pay for what a person wants or
needs, he or she can use credit.
Credit is money that you borrow from a bank; the ability to borrow money.
When you let the bank use your money, that bank pays you interest.
When you use the bank’s money, you then must pay the bank interest .
There are many different types of CREDIT, i.e., credit cards, home loans, car
loans, college loans, etc..
Anytime money is owed, credit is extended.
The key to personal finance is never to borrow more than you can pay off
in a reasonable amount of time.
INVESTMENT
• using money or capital in order to gain profitable returns, as interest, income,
or appreciation in value.
• Investing is spending money in the hope of earning more
money than is spent. (Long Term)
• EX. Collectable trading cards. A card that is bought for a $1 may someday be
worth $10. A return of $9- which is 900% investment gain.
• EX. Honus Wagoner card in 1909
cost less than 50¢, this year
it sold for $2.35 million.