Sei sulla pagina 1di 18

Personal Finance

Understanding Personal Finance


FEARS!!
2
Personal Finance

Financial literacy is knowledge of:


Facts
Concepts
Principles
Technological tools

that are fundamental to being smart


about money.
3
Personal Finance

Financial illiteracy can cost you:


Problems with securing loans
Higher interest rates
Lack of funds in emergencies
Ability to make sound financial
choices

4
Personal Finance

Personal finance is the study of


personal and family resources
important for achieving financial
success and involves
spending
saving
protecting and
investing resources.

5
Personal Finance

Financial responsibility means

You are accountable for your future


financial well-being.

You strive to make wise personal


financial decisions.

6
Achieving Financial Success

Spend less to save and invest!


Savings
Investments
Standard of Living (aspirations) versus
Level of Living (actual conditions).

7
Achieving Financial Success

Financial Success: achievement of


financial aspirations.
Financial Happiness: Satisfaction
about money matters.
Financial security: The comfortable
feeling that your resources will be
sufficient to meet your needs and most
wants.
8
Building Blocks to Achieving Financial Success

9
Budgeting

Budget: A paper or electronic


document used to record both
planned and actual income and
expenditures over a period of time.

10
Budgeting Action Before the
Budgeting Period
Set financial goals.
Long-term goals

Intermediate goals

Short-term goals

11
Budgeting Action Before the
Budgeting Period

Make budget estimates.

Take-home pay (or disposable


income). How much do I have to work
with?
Increase Income/ Cut back on
expenses
12
Budgeting Action During the
Budgeting Period

Record the purpose of expenses.


Keep track of all transactions.
Monitor current balances to control
overspending.
Justify exceptions

13
Budgeting Action After the Budgeting
Period

Evaluate the budgeting progress.

Budget Variance: Difference between


amount budgeted and actual amount
spent or received.

14
Budgeting Action After the
Budgeting Period
Decide What to Do with Budgeted
Money Left Over at the End of the
Month.
Put the money into savings
Carry the surplus forward
Invest!!!

15
Some Final Suggestions

For successful budgeting:


1. Keep it simple.
2. Make it personal.
3. Keep it flexible.
4. Be positive.

16
Helpful Links
https://fafsa.ed.gov/
http://www.practicalmoneyskills.com/
https://finance.yahoo.com/
http://www.kiplinger.com/
http://www.investopedia.com/

17
18