Money management - answer✔day to day financial activities to manage current personal
economic resource while working toward long term financial security
challenge with money management - answer✔to coordninate these decisions with one's needs,
goals and personal situation
what's at the centre of financial planning - answer✔daily spending and saving decisions
recall: opportunity costs and money management - answer✔-spending money reduces the
amount that can be saved and invested
-saving and investing reduces the amount that can be spent now
-buying on credit ties up future income
-using savings for purchases results in lost interest earnings:savings cant be used for other
purposes
-comparison shopping can save money but uses up valuable time
major money management activities - answer✔1. storing and maintaining personal financial
records and documents
2. creating personal financial statements (balance sheets and cash flow statements of income
and outflows)
3. creating and implementing a plan for spending and saving (budgeting)
disposing of financial records - waste basket - answer✔-receipts for small, non tax deductible
purchases
-expired warranties
disposing of financial records - shredder - answer✔-quarterly investment account statements
-documents you no longer need with personal information
disposing of financial records - computer recycle bin - answer✔-empty recycle bin on regular
basis
-make sure personal data files are completely erased
create personal financial statements to - answer✔-summarize the values of the items owned
and the amounts that are owed
-track cash inflows by source and outflows by type
-identify strength and weaknesses in current financial situation
-measure progress towards financial goals
-provide data for use in filing income tax returns or applying for credit
personal balance sheet - answer✔-a financial statement that reports what an individual or
family owns and owes, also called a net worth statement
-items of value (what is owned) - amounts owed (what is owed) = net worth (wealth)
components/steps of a balance sheet (net worth statement) - answer✔1. listing items of value
2. determining amounts owed
3. computing net worth
listing items of value - answer✔assets:
-liquid assets
-real estate
-personal possessions
-investment assets
assets - answer✔-cash and other property with a monetary value
-liquid assets
-real estate
-personal possessions
-investment assets
2|Page
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Brightstars. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.49. You're not tied to anything after your purchase.
