F23 P4 Money Mgmt by Dawn Piper

How are opportunity costs or trade offs and money management related?

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1) When you manage your spending and saving, you have to sacrifice certain things which costs you the loss of an opportunity if you did spend your money on something or saved more of it overtime.

Compare and Contrast maintaining financial records and opportunity costs.

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4) Maintaining financial records and opportunity costs are similar in that your financial records show you the effects of your choices made and can help you decide whether or not to change your ways. They are different in that the financial record is just keeping track of your situation while opportunity costs keep track of the decisions you are making, not specifically how they are affecting you.

4) Assets - Explain why it is sometimes difficult for people to increase their savings. How will increasing the amount you put in savings affect your budget?

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Many people don't understand how to save or budget their money, which causes them to spend more than they earn. If you increase your savings you may need to adjust spending in another area such as your variable expenses. By putting more money into savings, you will have more money later in life to spend.

Question 1) Why is is important to keep and maintain financial records and documents?

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Its important to keep financial records since it will ensure that you will have a good record to prepare accurate financial statements. Some records include your income (profit and loss) statements and balance sheets. They can help you in dealing with your bank or creditors and help you manage your business (manage your businesses health on its wealth)

Money Management

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the day-to-day financial activities necessary to get the most from your money

1) What are the steps for developing a personal budget?

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Set your financial goals
Estimate your income
Budget for unexpected expenses
Budget for fixed expenses
Budget for variable expenses
Record what you spend.

What is an Effective System for maintaining personal financial documents?

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An effective system for maintaining personal financial documents is to keep these documents such as pay stubs and bank statements in one central location and organized in a place like a home filing system and put into different categories like checking account statements and utility bills, etc. Some other effective systems include a safe-deposit box or a home computer.

Safe-Deposit Box

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a small, secure storage compartment you can rent in bank to store important financial documents

Austin T. - 2) Describe what items are in a personal budget.

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2) Necessities like food, hygiene products, and transportation costs, bills like heat, water, or electricity, debts like loans and mortgages, nonessentials such as entertainment and (some) clothing, and portions allotted to savings.

Personal Financial Statement

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a document that gives information about a person's current financial status and includes a summary of income and spending

3)What are the advantages of increasing your savings? Shresh B

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For one it gives you money for when life throws uncertainties and another advantage will help you reach your financial goal. Also the money saved earns interest income.

Insolvency

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Not being able to pay a debt.

wealth

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property that has money or exchange value

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Market Value: The amount recorded on the real estates portion of your balance sheet is the properties market value

Liabilities: The debts you owe

Personal Balance Sheet

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A sheet that shows your overall wealth at a certain moment in time by displaying your assets minus your liabilities to show you your total net worth.

Cash Flow

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Money that comes in and out of your pocket.

liquid assets

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cash and items which can be quickly converted to cash

Income

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Money you gain from either your investments and/or a job.

surplus

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the amount that remains when use or need is satisfied.

definition

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Deficit; the amount by which something, especially a sum of money, is too small.

Budget; A budget is a way to balance income, expenses and financial goals over a length a time

Budget variance; the difference between the budgeted amount of expense or revenue, and the actual cost.

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Personal Balance Sheet - A financial statement that shows you what you owe and own

Net Worth - The difference between the amount you own and the debts that you owe

Assets - Items of value that you own (ex. real estate, personal possessions, cash, etc.)

real estate

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land and any structures that may be in it, second category of wealth

What is a cash flow statement

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A cash flow statement is a type of financial statement that shows the total amount of money coming into and leaving a business.

Dante, Alie, Audrey Questions 3 and 4

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You use information from your income statement and your balance sheet to create your cash flow statement. The first step in creating a personal Balance Sheet is to determine your assets. This includes the items you own such as cash and real estate. After you list your assets and liabilities, you list the values of the assets and the balance of the liabilities and then total up both categories.
The cash flow statement's actions result in assets and liabilities that are displayed on the balance sheet. A personal balance sheet lists all of your assets and obligations and determines your net worth, whereas a personal cash flow statement tracks your financial inflows and expenditures.