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38 Cards in this Set
- Front
- Back
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Financial planning process risks:
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1.Inflation Risk : Prices go up, lost buying power.
2.Interest rate risk: Effect costs borrowing and rate of return. 3.Income risk: job loss 4.personal risk: Health, safety, or costs 5.Liquidity risk: Higher return may mean less liquidity. |
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Opportunity costs:
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What you give up when you make a choice
The cost or trade off of a decision, cannot always be measured in dollars. Sometimes the cost is your time. |
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The financial planning process
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1. Determine current financial situation
2.Develop your financial goals 3.Identify alternative courses of action 4.Create and implement your financial action plan 5.Review and revise your plan |
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Time frame of goals:
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Short term less than a year
intermediate longterm more than a year |
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Guidelines of goals
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Goals should be realistic
stated in specific terms have a time frame indicate the action to be taken not too easy |
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Consumer Price Index
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Government monitors consumer basket to see how much it costs to purchase things. If prices go then the value of the dollar goes down
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Future value of money
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*The amount to which the current saving will increase based on a certain interest rate and a certain time period
*future value is also called compounding-earning interest on previously earned interest *Can be computed for a single amount or for a series of deposits. |
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Compounding
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Earning interest on interest
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Present Value of money
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*Current value for a future amount based on a certain interest rate and a certain time period.
*Present value calculations are also called discounting present value of the amount you want in the future will always be less than the future value *can be computed for a single amount or for a series of deposits |
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Discounting
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present value calculations
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Implementing your financial plan: How to?
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Develop good financial habits
*Use a well conceived spending plan to help you stay within your income, while allowing you to save and invest for the future *Have appropriate insurance protection to prevent financial disasters *Become informed about tax and investment alternatives *Study personal finance |
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Implementing your financial plan:Achieving your financial objectives 2 things
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1. A willingness to learn
2.Appropriate info sources: -periodicals -financial institutions -personal financial software -the world wide web - financial specialist -courses and seminars |
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Financial and personal aspects of career choice to consider
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consider the trade offs of career decisions
-evaluate the trade offs related to personal social and economic factors -formal training affects financial success -competencies of successful people include willingness to cope with conflict and adapt to change |
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What is aptitude?
other personal factors affecting career selection |
- natural abilities such as working well in team settings, do you possess.
interest inventories- help you determine what gives you satisfaction -your personality- how much structure do you like. do you prefer low pressure or high?? |
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Career opps are affected by?
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high interest rates
price increase decreased demands for goods and services |
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Career information sources:
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Library material
mass media career information world wide web campus career development office |
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Identifying job opps.
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-job advertisements
-career fairs -employment agency -job creation -visit companies -telephone and business -directories -web search -talk with alumni in your field |
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Stages of career development:
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-Pre-entry and career exploration
-establishment and professional growth -advancement and mid career adjustment -late career and preretirement stage |
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Elements of developing a resume
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personal data section
career obj. section education section experience section related info. section references section |
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3 types of resumes
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-chronological: most common focuses on experience in reverse times sequence
-functional: focuses on your skills -targeted- prepared for a specific job -E-resumes fpr applying for a job online (simple format no attachments) |
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Creating a cover letter
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*Intro paragraph
*get readers attn. (overview qualifications) *Development paragraph: specific qualifications, refer to details on resume, exp. and training *Concluding paragraph/ ask for interview, include how to contact you, summ how you can help company |
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job interview prep
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get info about prospective employer
-library resources, annual or articles -internet searches of company and infor -observations during company visits. -prep ques to ask about your interest the organization, policies and benefits -practice interview skills |
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Interview process
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Dress appropriately
arrive 10 min. early interview process: screening, e-interview,or selection interview. -After the interview follow up thank you letter, evaluate performance |
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What to keep in a home file
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Items you refer to often
-personal and employment -records -money management records -tax records -financial services records -consumer purchases, auto and credit records -housing records -insurance records -investment records -estate planning and retirement records |
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What to keep in a safe deposit box??
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records hard to replace
-birth, marriage,death certs. and will -adoption and custody papers -serial numbers and photos of valuables -CDS and credit and banking account numbers -mortgage papers and titles -list of insurance policy numbers -stock and bond certs. -coins and other collectibles. |
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Records to keep on a personal computer
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current and past budget
summ. of checks written and other banking transactions -past income tax retursn prepared with tax prep. software - account summ. and performance results of investments -computerized versions of wills, estate plans, and other docs. |
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What does a cash flow statement show?
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Shows inflow, outflow for a given time period.
record inflow -net income from employment -saving and investment income -other sources Record cash outflows -fixed and variable expenses -net cash flow can be a surplus or a deficit. -use this statement as a basis for creating a spending, saving, and investment. |
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components of a balance:
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assets
liabilities compute your net worth |
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what are assets and liabilities:
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assets-what you own.
liquid assets real estate personal possessions investment assets Liabilities: what you owe -current liabilities less than a year -long term liabilities Compute net worth by: assets minus liabilities |
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Fixed Expenses:
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set amounts that you are obligated to pay.
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characteristics of a budgeting system:
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-well planned
-realistic -flexible -clearly communicated |
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difference between cash flow and a budget
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cash flow is a record of how you spent money in a past time period, a budget is a plan for spending in the future.
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Variable expenses
Deficits Surplus |
Amount to be spent for household and living expenses.
Deficit is what you owe Surplus is an amount left over |
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Balance sheets report
4 types of taxes |
current financial position
-taxes on purchases- wages, salary, commissions, fees, tips or bonuses -taxes on property: real estate property tax personal property tax -taxes on wealth federal estate tax, state inheritance taxes -taxes on earnings income, social security taxes |
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Tax exempt income
Tax deferred investments: |
municipal bonds can help reduce your taxes
-bonds, interest is exempt if used for tuition -tax deferred annuities -tax deferred retirement plans such as 401k 15% of income with min. of 14,000 or Keogh plan if self employed. |
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Career change: When to:
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Time to change when
-low motivation -physical or emotional distress of job -consistent poor performance. eval. -lack social interactions w/ coworkers -poor relationship with superior |
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Effective networking
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Process of making and using contacts to obtain and update career infor
70% professionals find positions this way. 1. community orgs. 2. professional associates 3.business contacts Effective networking: Prep and prepare 30 sec sum. abilities and experience 2. volunteer for events 3. ask ques. for others to talk about self |
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Job
Career |
employment for monetary gain without regard for interest or opps for advancement
committment to a profession that requires continued training and offers a clear path for occupational growth. |
