BUSN380 Week 1 TCO 1 Notes - Personal Finance Basics & Time value of Money

BUSN380 Week 1 TCO 1 Notes - Personal Finance Basics & Time value of Money

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BUSN380 Week 1 Notes CHAPTER 1 Key Concepts : Analyze a personal financial statement. Identify opportunity cost. Measure the time value of money. Compute the present value of a lump sum and an annuity. Compute the future value of a lump sum and an annuity. Explain compounding and discounting Personal Financial Planning is the process of managing your money to achieve personal economic satisfaction. The planning process allows you to control your financial situation. A comprehensive financial plan can enhance the quality of your life and increase your satisfaction by reducing uncertainty about future needs and resources. ADVANTAGES 1. Increased effectiveness in obtaining, using, and protecting your financial resources throughout your lifetime. 2. Increased control of your financial affairs by avoiding excessive debt, bankruptcy, and dependence on others for economic security. 3. Improved personal relationships resulting from well-planned and effectively communicated financial decisions. 4. A sense of freedom from financial worries obtained by looking to the future, anticipating expenses, and achieving your personal economic goals. The financial Planning Process is a logical, six-step procedure that can be adapted to any life situation:
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BUSN380 Week 1 Notes Step 1 - Determine current financial situation: - Income, savings, living expenses, and debts - Step 2 - Develop your financial goals (spend, save or invest): - Analyze values & goals several times a year, to separate wants from needs. - how you feel about money & why? - are the feelings based on facts or other people's influence? - are financial priorities based on social pressures, household needs, or desires for luxury items? - Effect of economic conditions on goals and priorities Step 3 - Identify alternative courses of action - possible courses of action fall into the following categories: o Continue same course, e.g., save same amount o Expand current situation, e.g., save more o Change current situation, e.g., use a money market acct instead of regular savings.
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BUSN380 Week 1 TCO 1 Notes - Personal Finance Basics & Time value of Money

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