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Chapter3LectureOutline_000

Chapter3LectureOutline_000 - CHAPTER 3 LECTURE OUTLINE I...

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CHAPTER 3 LECTURE OUTLINE I. PLANNING FOR SUCCESSFUL MONEY MANAGEMENT (p. 78) Money management refers to the day - to - day financial activities necessary to handle current personal economic resources while working toward long - term financial security. Opportunity Cost and Money Management (p. 78) Trade - offs are associated with every spending, saving, borrowing, and investing decision. Components of Money Management (p. 78) Personal financial records, financial statements, and spending plans (budget) are the foundation for planning and implementing money management activities. II. A SYSTEM FOR PERSONAL FINANCIAL RECORDS (p. 79) Organized money management requires a system of financial records including the following categories: 1. money management records 2. personal and employment records 3. tax records 4. financial services records 5. credit records 6. consumer purchase records 7. housing and automobile records 8. insurance records 9. investment records 10.estate planning and retirement records III. PERSONAL FINANCIAL STATEMENTS FOR MEASURING FINANCIAL PROGRESS (p. 81) A personal balance sheet and cash flow statement provide information about a person’s or household’s current financial position and a summary of current income and spending. The Personal Balance Sheet: Where Are You Now? (p. 81) A balance sheet , also known as a net worth statement, specifies what you own and what you owe. Items of value minus amounts owed equals net worth. Assets , the first item on the balance sheet, are cash and other property that has a monetary value. Liquid assets are cash and items of value that can easily be converted into cash. Real estate includes a home, condominium, vacation property, or other land that a person or family owns. Personal possessions are the major portion of assets for most families. Investment assets consist of money set aside for long-term financial needs. Liabilities are amounts owed to others but do not include items not yet due, such as next month’s rent. 1
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CHAPTER 3 LECTURE OUTLINE I. PLANNING FOR SUCCESSFUL MONEY MANAGEMENT (p. 78) Money management refers to the day - to - day financial activities necessary to handle current personal economic resources while working toward long - term financial security. Opportunity Cost and Money Management (p. 78) Trade - offs are associated with every spending, saving, borrowing, and investing decision. Components of Money Management (p. 78) Personal financial records, financial statements, and spending plans (budget) are the foundation for planning and implementing money management activities. II. A SYSTEM FOR PERSONAL FINANCIAL RECORDS (p. 79) Organized money management requires a system of financial records including the following categories: 1. money management records 2. personal and employment records 3. tax records 4. financial services records 5. credit records 6. consumer purchase records 7. housing and automobile records 8. insurance records 9. investment records Current liabilities
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