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27 Cards in this Set
- Front
- Back
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Financial planning process
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1. determine ur current situation
2. develope ur financial goals 3.identify alternative courses of action 4.evaluate alternative 5 create n implement an Action plan 6. review and revise ur plan |
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variable expense
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A variable expense is a cost that changes significantly from period to period, such as week to week, month to month, quarter to quarter or year to year
ex. groceries, phone bill, car maintenance |
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budget variance
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difference bw amount budgeted and the actual ammount
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disposable income
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earnings after deductions for taxes and other items
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3 major money management activities
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storing and maintaining personal financial records and documents
-creating and implementing a plan for spending and saving -creating personal financial statements |
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fixed expense
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cost that does not change from period to period or that changes only very slightly
ex.mortgage or rent payments, car payments, real estate taxes and insurance premiums. |
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passive income
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is a rent received on a regular basis,
ex. rent from a property u own |
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portfolio income
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Income from investments, including dividends, interest, royalties and capital gains
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table A
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compute the FUTURE value of a present amount
ex. how much will i have earned at the end of 5 yrs if i put 1000 in bank today and earn a constant rate of 6% |
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table b
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compute the Future value of an annuity assuming a constant rate of interest and a given number of deposits
ex. how much will i have at the end of 5 yrs if i deposit 1000 at the end of every yr and earn constant 6% ir |
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table c
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compute the PRESENT Value of a known future amount assuming a constant ir
ex how much do i have to put in today to have 1,338 at the end of 5 yrs |
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table d
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allows you to determine how much is needed today in order to draw a set amount for a given number of periods
ex. how much do i have to have in the bank in order to draw 10,000 at the end of each year of the next 10 yrs |
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table d
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allows u to determine the amount of an annuity that can be taken from a present value for a set time period
ex how much can i withdraw at the end of 5 yrs if i have 50000 in the bank to begin w |
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itemized deduction
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Medical
taxes interest(morgage only) Job expenses and misc |
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ttrust
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used to manage ones assets
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Asset management account
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all-purpose account that provides severly services
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Demand Deposits
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another name for a
-checking account -atm -debt card -cashiers check -money orders -certifies checks -electronic bill pay |
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ATM
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Automatic Transfer of money
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FDIC
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Federal Deposit Insurance Corporation
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Installment credit
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another name for closed-ended credit
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closed ended credit
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specific amounts, specific term
ex. a mortgage loan |
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installment sales credit
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loan that allows you to relieve merchandise such as a refridgerator
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revolving check credit
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prearranged loan for a specified amount that u can use by writing a special check
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debt-to-equity ratio
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calculated by dividing total liabilities by net worth
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ccapacity
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borrowers financial ability to meet credit obligations
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capital
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borrowers assets for net worth
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collateral
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valuable asset pledges to assure loan payments and subject to seizure upon default
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