Personal Finance

What are some factors that influence daily financial decisions? 1) Age2) Marital Status3) Number and age of household members4) Employment situation
How can your career choice effect your financial goals? The steps of the financial planning process can provide an approach to career planning, advancement, and career change.
What are four of the main financial planning information resources? 1) The internet2) Financial institutions3) Media sources4) Financial specialists
What are some common risk to consider when doing your financial planning? 1) Inflation2) Interest rate3) Income4) Personal risk5) Liquidity
What are the six steps to the financial planning process? 1) Determine financial situation2) Develope financial goals3) Identify alternative actions4) Evaluate alternatives5) Create financial plan6) Review and revise plan periodically
How do you calculate present value? Deposit (want x % interest)
What is present value? Current value for a future amount based on a certain rate and a certain time
How do you calculate future value? Original amount + (Original amount x % interest x time)
What is future value? Amount to which current savings will increase based on interest rate and certain time period
How do you calculate the amount of interest earned? Amount saved x annual interest x time period = interest
What is the time value of money? Increase in an amount of money as a result of interest earned
What are the different types of opportunity cost? 1) Personal-time-energy-health-abilities-knowledge2) Financial-spending-saving-making
What is an opportunity cost? What a person gives up by making a choice
What are the guidelines for effective financial goals? 1) Realistic2) Specific3) Based on time frame4) Action oriented
What is a durable product goal? Involve infrequently purchased, expensive items
What is a consumable-product goal? Occur on a periodic basis and are used up quickly
What are the three types of financial goals? 1) Short term – 1-2 Years2) Intermediate – 2-5 Years3) Long term – 5+ Years
What are the eight major personal financial planning areas? 1) Obtaining2) Planning3) Saving4) Borrowing5) Spending6) Managing risk7) Investing8) Retirement planning
What is the rule of 72? 72/% interest= # of years
What are interest rates? Represent the cost of money
What is inflation? Rise in the general level of prices
How can the global economy influence financial activities? Domestic money supply may be reduced or increased, causing deflation or inflation
What is economics? Study of how wealth is created and distributed?
What are values? Ideas and principles a person considers correct, desirable, and important
What is the adult life cycle? Stages in the family situation and financial needs of an adult
What are some of the advantages of personal financial planning? 1) Protecting personal finances2) Control of financial affairs3) Personal relationships4) Freedom from financial worries
What is a financial plan? Report that summarizes current financial situation, analyzes financial needs, recomends future financial activities
What is personal financial planning? Managing your money to achieve personal economic satisfaction

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