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34 Cards in this Set
- Front
- Back
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How to recognize relationship b/w financial documents and money management strategies
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effective money management=organization in order to:
-plan measure financial progress -handle routine matters -determine available money -make effective decisions on saving |
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How to create system to maintain personal financial documents
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home files - personal/employment, insurance, investment
safe-deposit - birth certificate, mortgage loan, will copy, valuable collectibles home computers - budgets, checks written summaries, tax |
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How to develop personal balance sheet/cash flow statement
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Personal Balance
1) assets 2) liabilities 3) net worth 4) evaluate situation Cash Flow 1) income 2) expenses 3) determine net cash flow (income-expenses) |
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How to analyze personal financial situation
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different ratios (debt, liquidity, debt-payments, savings) to measure progress - KNOW THEM
check net cash flow (NO DEFICIT) for net worth |
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How to create practical budget
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1) goals
2) income estimate 3) unexpected expenses/savings 4) fixed expenses 5) variable expenses 6) record spending 7) review Grumpy Irresponsible Unicorns Find Vacant Ruined Receipts |
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How to achieve financial goals by increasing savings
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-PAY YOURSELF FIRST!
-payroll savings deduction -spend less each day -start early |
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How to identify/schedule financial services
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-savings
-payment services -borrowing -protection, investment, tax help, financial planning Read pg. 124-126 |
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How to distinguish among various types of financial institutions
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Deposit
-commercial banks -savings and loan -mutual savings -credit unions Non-Deposit -life insurance -investment -finance -mortgage REVIEW - pg. 129-131 |
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How to compare costs/benefits of different savings plans
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-regular savings
-CDs -money market -US Savings try to list cost/benefits, if not=review |
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How to evaluate savings plans
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-rate of return
(total interest earned/deposit) -inflation -tax considerations -liquidity -restrictions/fees |
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How to compare costs/benefits of checking account types
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-regular checking
-activity -interest-earning REVIEW pg. 141-143 (REVIEW ALSO EVALUATING...) -restrictions -fees/charges -interest -special services |
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How to use checking account effectively
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-individual or joint?
-writing checks properly -making deposits properly (review) -know check clearing -maintaining, activity statement and reconcile 1) compare checks 2) determine recent deposits 3) subtract fees/charges 4) add interest |
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How to analyze advantages/disadvantages of consumer credit
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advantages
-goods/services NOW -only acceptable -safer -responsible to lenders disadvantages -possible overspending -bad credit rep. -lose income/property to repay |
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How to determine if you can afford a loan
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debt payments-to-income ratio
monthly debt payments/monthly net income = DPR -if below 20% = you can afford, responsible pay-expenses = enough for loan? other money to use? (e.g. in savings) |
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How to describe what creditors look for in a credit applicant (i.e. the 5 Cs of Credit)
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Character-will you repay?
Capacity-can you repay? Capital-assets/liabilities Collateral-what if you don't? Credit History |
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How to develop effective strategy to build/maintain credit rating
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REVIEW
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How to identify ways to protect credit
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law=can't hurt credit rating w/in negotiating
defective goods/services=can stop credit payments credit from theft/loss (REVIEW) on Internet (REVIEW) |
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How to discuss ways to manage debt
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-financial counseling
-bankruptcy (REVIEW types) |
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How to explain way to prepare for/establish investment program
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-establish goals
(REVIEW ch.8 - pg.237-) |
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How to assess factors affecting investment choices
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-safety/risk (inflation, interest rate, business failure, financial market, global investment)
-investment income -investment growth -investment liquidity (REVIEW) |
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How to identify main types of investment alternatives
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stock, corporate/gov't bonds, mutual funds, real estate
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How to recognize steps involved in developing personal investment plan
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1) goals
2) money needed 3) money you have 4) list all investments 5) evaluate risk/potential return 6) reduce list to reasonable 7) choose at least 2 GMMLERC Good Messy Monsters Leave Early Repetitive Clubs |
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How to identify your role and financial planner role in personal investment program
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-assess current financial situation
-offer clearly written plan -help track progress -guide you to other experts if necessary YOUR ROLE -evaluate potential investments -monitor investment value -keep accurate/current records -consider tax (tax-exempt, deferred) |
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How to select sources of financial info to reduce risk and increase returns
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Internet, newspapers, news programs, business periodicals, gov't publications, corporate reports, statistical averages, investor services
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How to describe importance of taxes in financial planning
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everyday part of life
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How to identify taxable income
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AGI - tax deductions/exemptions
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How to compete a W-4
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How to prepare federal tax return
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How to identify sources of tax assistance
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IRS, how-to books, tax prep software, tax professionals
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How to select best tax strategies for financial/personal needs (and what tax form to choose?)
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consumer purchasing
investment decisions retirement plans 1040EZ (>$50,000), 1040A (>$50,000; childcare, IRA, etc.), 1040 (< $50,000) |
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How to identify main types of risks/risk management for all insurance types
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risk - chance of loss/injury
peril - anything that can cause loss hazard - anything increasing likelihood of loss risk management -avoidance -reduction -assumption -shifting REVIEW pg. 414 |
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How to recognize importance of property/liability insurance (what each provides)
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most people have large amounts of $ in property (need to protect, make sure nobody gets injured on property)
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How to describe insurance coverage and policy types available to homeowners, renters, vehicle owners
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-building living in and any other structures on property
-additional living expenses -personal property -personal liability and related coverages -specialized coverages HO-1, HO-2, HO-3, HO-4, HO-5 REVIEW pg. 425 |
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How to develop insurance program as a way to manage risk
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1) goals
2) plan 3) action 4) review |
