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28 Cards in this Set
- Front
- Back
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5 steps in order of financial planning |
1) Evaluate-financial health(don't owe more than you owe) 2) Define-your goals 3) develop - a plan 4) implement - the plan 5)review - your progress, repeat |
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Financial life cycle |
1) basic wealth protection 18-45 years old (longest) 2) wealth accumulation (maturity ) 38-65 3) wealth distribution (retirement ) 65+ |
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10 principals for personal finance |
Knowledge- is power, got to know the principles
Plan-little gets accomplished without a plan Time value of money- $1 is worth more than $1 tomorrow Taxes-should affect your decisions
Liquidity - ability to pay your bills in the short term (within a year ) Waste- identify valueless items Protect- insurance Risk and return- high risk = high return Mind games - understand who you are Just do it- don't make excuses
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Liquidity |
Cash or items expected to be used up or converted to cash within a year to generate revenue Ratio= current assets / current liabilities |
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Solvency |
Long term debt coverage ratio = total income avaitfor living expense / total long term debt payments (<2.5 is red flag) |
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Balance sheet contains what 3 ? |
Assets- hat you own Liabilities - what you owe Equity - what you are worth |
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Income statements contain which two |
Revenues -what you earn Expenses - what you use up Formula rev-exp = net income(loss) |
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What is a W4 |
Used by your employer to withhold the proper amount of federal income tax for your paycheck. |
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Excise taxes |
Booze and cigs (sin tax) |
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Earned income vs passive income |
Earned = money physically earned Passive = money earned without working (investments ) |
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What qualifies for itemized deductions (4main) |
Medical Taxes Mortgage interst Charitable contributions Other |
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Types of credit 6 (taxes) |
Child tax Education Child and dependent care Earned income Energy efficiency Adoption |
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Online banking pros and cons |
Pros Personal financial management support Convenience Efficiency Effectivemss Cons Start up time Adapting to system Feeling comfortable Customer service |
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Types of NON -DEPOSIT INSTITUTIONS |
mutal funds Stock brokerage firms |
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Where can you have savings? |
Banks /deposit-type institutions *** Commercial banks Savings and loan associations Savings bank Credit unions |
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Which Institution should you out your money in? |
Credit union |
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Money in a bank is insured by? |
FDIC federal deposit insurance corporation |
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Money in a credit union is insured by |
Fcua - federal credit union act |
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Types of electronic transfers 6 |
Electronic fund transfer Auto.aged teller machines (ATM) Debit cards Smart cards Gift cards Fixing these mistakes |
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Grace period |
Period credit card company gives you to pay your new charges without having to pay interest on the new balance (month) |
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Types of fees 5 |
Annual fee Cash advance Late Over the limit Penalty rate |
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Pros of credit cards |
Convience Building credit Temporary loan Using it on internet Can use as second ID Extended warranties Travelers rewards |
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Credit card Cons |
High interest rates Too easy to spend (lose track) |
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Sources of open credit |
Bank credit cards Bank card variations Affinity -% of each purchase is donated Secured - can only spend what you have Premium - Travel and entertainment Single purpose Traditional card |
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5c's of credit |
Character - history Capacity Capital - your net worth Collateral -things they can take Conditions - of your life |
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What affect your credit score |
Payment history Amount owed and available credit Length of credit Types of credit used New credit |
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Consumer loans |
Formal Contracts detailing how much you are borrowing and when and how you are going to pay it back. Bigger purchases Single payment(balloon) Variable rate installment Unsecured -no colateral Secured Fixed rate Variable rate |
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Types of bankruptcy |
Personal Straight |
