C70_chapter4.ppt - Personal Finances 4.1 MEASURING AND...

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Unformatted text preview: Personal Finances 4.1 MEASURING AND CONTROLLING 4.1 MEASURING AND CONTROLLING PERSONAL FINANCES PERSONAL FINANCES • VERY LITTLE FINANCIAL PLANNING CAN BE DONE UNLESS WE KNOW THE RESOURCES AVAILABLE, WHERE THEY COME FROM AND WHERE THEY ARE SPENT 4.2 OBJECTIVES 4.2 OBJECTIVES • PREPARE A FAMILY BALANCE SHEET TO DETERMINE THE FAMILY’S NET WORTH. • PREPARE A FAMILY’S INCOME STATEMENT TO SEE WHERE THE MONEY CAME FROM AND WHERE IT WENT DURING THE YEAR. • PREPARE A BUDGET FOR THE NEXT PERIOD OF TIME THAT INCORPORATES THE FAMILY’S OBJECTIVES. • DEVELOP CONTROL MECHANISM SO THAT THE FAMILY MEETS ITS BUDGET AND CONTINUES TO MOVE TOWARDS ITS OBJECTIVES 4.3 NET WORTH PLANNING 4.3 NET WORTH PLANNING • IS MORE THAN MERELY CONSTRUCTING A NET WORTH STATEMENT. • IT INVOLVES CALCULATION OF CURRENT NET WORTH, SETTING A NET WORTH GOAL FOR NEXT YEAR, AND DEVELOPING SPECIFIC STRATEGIES FOR MEETING THAT GOAL. • THE MAIN REASONS FOR NET WORTH PLANNING ARE TO: – ESTABLISH FINANCIAL DISCIPLINE. – ORGANIZE A FINANCIAL LIFE AROUND A FUTIRE TARGET....
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This note was uploaded on 07/20/2011 for the course MGMT 70 taught by Professor Ahmed during the Spring '11 term at University of Toronto.

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C70_chapter4.ppt - Personal Finances 4.1 MEASURING AND...

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