Bài giảng Personal Financial - Chapter 2: Money Management Skills

2 Money Management SkillsMoney management = Day-to-day financial activities necessary to manage current personal economic resources, while working toward long-term financial securityDaily spending and saving decisions = central to financial planningMust be coordinated with needs, goals, and personal situation2-*Objective 1Identify the Main Components of Wise Money Management2-*An Organized Personal Financial Records SystemProvides a basis for:Handling daily business affairs, such as bill payingPlanning and measuring financial progressCompleting required tax reportsMaking effective investment decisionsDetermining available resources for current and future buying2-*Records in Your Home File/Computer Items you refer to often:Personal and employment records (resume, benefit info)Money management records (budget, balance sheet)Tax records (W-2 forms, receipts, copies of past returns)Financial services records (checkbook, bank statements)Credit records (statements, list of account numbers)Consumer purchase & auto records (warranties, receipts)Housing records (lease, property tax, home improvements)Insurance records (policies, claim reports)Investment records (CD certificate #s, brokerage statements)Estate planning & retirement records (will, pension, IRA)2-*What to Keep in a Safe Deposit BoxRecords and items that would be hard to replace:Birth, marriage and death certificatesList of checking, savings and financial institution account numbers Citizenship and military papersAdoption and custody papersSerial numbers and photos of valuablesCDs and credit and banking account numbersMortgage papers and titlesList of insurance policy numbersStock and bond certificatesCoins and other collectiblesCopy of will2-*How Long to Keep RecordsRecordsRetention PeriodBirth certificates, wills and social security informationIndefinitelyPersonal property and investmentsAs long as you own themDocuments re: purchase and sale of real estateIndefinitelyCopies of tax returns and supporting data7 years minimum10 years better2-*Objective 2Create a Personal Balance Sheet and Cash Flow StatementBenefits of Personal Financial Statements Report current financial position in relation to value of items owned and amounts owedMeasure progress toward financial goalsMaintain information on financial activitiesProvide information for preparing tax forms or applying for credit2-*Balance Sheet A financial statement that reports what an individual or family owns and owes as of a specific date:Also called:Net worth statement Statement of financial positionItems of Value (what you own)-Amounts owed (what you owe)Net Worth (your wealth)=2-*Components of a Balance SheetStep 1 – List items of valueLiquid assets (e.g., checking & savings)Real estate (e.g., house, condo, land)Personal possessions (e.g., car, computer)Investment assets (e.g., mutual funds, IRAs)Step 2 – Determine amounts owedCurrent liabilities (debts repaid in Inflows Draw from savings or borrowProblem/Result: Lower assets or higher liabilitiesInflows > OutflowsPut money into savings or pay off debtsResult: Higher net worth2-*Selecting a Saving Technique to “Pay Yourself First”Write a check each payday and deposit in a savings accountUse payroll deduction to deposit a certain amount in savings (direct deposit)Save coins or spend less on certain items2-*Convert financial goals into specific savings amounts using time value of money calculationsUsing Savings to Achieve Financial Goals2-*Wrap UpChapter QuizConcept Check 2-1- How Long Should Items Be Kept?Credit card statements, mortgage documents, receipts, retirement account info, willConcept Check 2-2- Identify items in financial statementsConcept Check 2-3- Identify types of expensesConcept Check 2-4- Which financial statement?