Chap 1 - and savings Evaluate your current financial...

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Chap 1 Personal finance: the process of planning your spending, financing, and investing so as to optimize your financial situation Personal financial plan: a plan that specifies your financial goals and describes the spending, financing, and investing plans that are intended to achieve those goals Opportunity cost: what you give up as a result of a decision How You Benefit From An Understanding of Personal Finance: Make your own financial decisions Every spending decision has an opportunity cost Judge the advice of financial advisors Make informed decisions Become a financial advisor Many career opportunities available Components of a Financial Plan 1. Budgeting and tax planning 2. Managing your liquidity 3. Financing your large purchases 4. Protecting your assets and income (insurance) 5. Investing your money 6. Planning your retirement and estate A Plan for Your Budgeting and Tax Planning Budget planning: The process of forecasting future expenses
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Unformatted text preview: and savings Evaluate your current financial position Assets: what you own Liabilities: what you owe Net worth: the value of what you own minus the value of what you owe A Plan to Manage Your Liquidity Liquidity: access to funds to cover any short-term cash deficiencies Money management: decisions regarding how much money to retain in a liquid form and how to allocate the funds among short-term investment instruments Credit management: decisions regarding how much credit to obtain to support your spending and which sources of credit to use A Plan for Your Retirement and Estate This includes insurance planning, retirement planning, and estate planning Retirement planning: determining how much money should be set aside each year for retirement and how those funds should be invested Estate planning: determining how your wealth will be distributed before or upon your death...
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Chap 1 - and savings Evaluate your current financial...

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