Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 27 views

    2020 Basics of Personal Finance

    Uploaded by

    biarificosas
    The document discusses basics of personal finance including understanding consumers, steps to making buying decisions, planning and budgeting, credit, and saving and investing. It defines key terms like income, expenses, budget, and credit. It provides examples of making a budget and using credit responsibly.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    2020 Basics of Personal Finance

    Uploaded by

    biarificosas
    27 views14 pages
    The document discusses basics of personal finance including understanding consumers, steps to making buying decisions, planning and budgeting, credit, and saving and investing. It defines key terms like income, expenses, budget, and credit. It provides examples of making a budget and using credit responsibly.

    Original Title

    2020 Basics of Personal Finance (1) copy

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses basics of personal finance including understanding consumers, steps to making buying decisions, planning and budgeting, credit, and saving and investing. It defines key terms like income, expenses, budget, and credit. It provides examples of making a budget and using credit responsibly.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    27 views14 pages

    2020 Basics of Personal Finance

    Uploaded by

    biarificosas
    The document discusses basics of personal finance including understanding consumers, steps to making buying decisions, planning and budgeting, credit, and saving and investing. It defines key terms like income, expenses, budget, and credit. It provides examples of making a budget and using credit responsibly.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 14

    BASICS OF

    PERSONAL FINANCE
    MANAGING YOUR
    MONEY
    You and everyone around you are consumers that
    play an important role in the economic system.
    UNDERSTANDING
    CONSUMERS
    A consumer is a person who purchases
    goods and services for personal use.

    Consumers must make educated decisions


    when purchasing goods and services in
    order to maximize the potential of their
    income.

    Income is the sum of all forms of earnings


    received, especially on a regular basis, for
    work or through investments.
    STEPS TO MAKING BUYING
    DECISIONS
    Many factors are involved in consumers’ buying decisions.

    Steps to Making Buying Decisions:


    Decide whether or not to buy an item

    Invest time obtaining product information

    Consider opportunity cost

    Purchase item
    EXAMPLE
    Ross needs a new computer for his first job out of college. He needs a
    computer that is compatible with Google Applications. He is willing to
    spend up to $600. Let’s use the Steps to Making Purchases to
    determine what Ross should do.
    Steps to Making Buying Decisions:
    Ross has decided to purchase a laptop.

    Ross should conduct research on different laptops for


    $600 or less that use Google Applications.
    Ross wants a laptop that will last him a long time because
    he does not want to buy another computer within the
    next two years.
    Ross purchases a laptop for $450 and upgrades $100 for
    a 10 year warranty.
    PLANNING AND
    BUDGETING
    Making and following a budget can help you organize
    your financial life.
    UNDERSTANDING
    BUDGETS
    A budget is a plan for future spending
    and saving that keeps track of estimated
    income and estimated expenses.

    Basic budgeting terms:

    Income: Sum of all earnings


    Expenses: Sum of all costs
    Balance: Leftover money after all
    expenses have been paid
    Surplus: When your income exceeds
    your expenses (good)
    Deficit: When your expenses exceed
    your income (bad)
    MAKING A
    BUDGET—AND
    STICKING TO IT!
    An important part of creating an
    accurate budget is tracking exactly how
    much money comes in and goes out
    each month.

    The best way to do this is by creating


    a table.

    Your table should include all of your


    regular monthly expenses.
    UNDERSTANDING BUDGETS
    Let’s say that your monthly income is $800. You are looking to buy a new phone that costs
    around $600. By creating a table, you can determine how much money is allocated to bills and
    other necessities and where you need to budget in order to reach your goal.

    Monthly Expenses Amount Balance

    Phone Bill $50 $750

    Car Insurance $250 $500


    After all of your
    expenses, you
    have a $200
    Groceries $100 $400
    surplus!

    Free Spending $200 $200

    By reviewing the table, you can determine that it will take you about 3 months to save the money
    needed to purchase a new phone. If you wanted to save money faster, you could allocate less
    money to the “Free Spending” category and save it instead.
    CREDIT
    Credit allows consumers to receive a
    good or service and pay for it later.

    Recognizing credit terms:


    A lender gives money to a borrower.
    A credit rating evaluates how likely a
    borrower is to repay a loan. The lower
    the credit rating, the less likely a
    borrower will repay a loan.

    Sources of Credit:
    Banks, savings and loans, credit unions, and
    finance companies offer credit
    Most common—credit cards
    CREDIT
    Benefits:
    Allows you to get what you want
    sooner
    Teaches financial discipline

    Drawbacks:
    Spending more than you can afford
    Bankruptcy
    Poor credit rating

    Your Responsibilities as a Borrower:


    Have a plan to make payments
    Use budget skills
    Understand credit agreement
    SAVING AND
    INVESTING
    Making and following a budget can help you organize
    your financial life.
    SAVING FOR
    THE FUTURE
    Your savings are income set aside for
    later use.
    Why save?
    Money for large purchases
    Emergency aid
    Purchase luxury goods
    AVOIDING
    IMPULSE
    BUYING
    Setting financial goals can help you
    spend money wisely.

    Beware of impulse buying or the


    buying of goods without planning to do
    so in advance, as a result of emotions
    or urge.

    You might also like