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Course Overview
Course Overview
Give you the skills to responsibly manage your money
Today, personal bankruptcies are out of control Personal Debt is at an all-time high
Give you perspective on how money and work should affect your life
People are more than just their jobs and possessions
Course Overview
Main Topics
Your Goals in Life Setting Financial Goals Maximizing Income Minimizing Expenses Maximizing Assets Minimizing Liabilities A Planning Approach Determining Net Worth Reflecting on what it all means
Financial goals
Financial independence is an important goal for many people. Financial independence is defined as having enough income or resources to be self-reliant. One of the financial choices that we make is between consumption today versus consumption in the future.
Set up a process now to set goals Then review them at least annually to see if you
Maximizing Income
You only have so much time on earth, you
should make the most of every moment. However, you need to balance your needs against the needs of others Your retirement age and income depend on how
well you do
Minimizing Expenses
If you spend more than you make, then you will
end up in debt. This seems so simple So why are so many Americans on the verge of bankruptcy?
Maximizing Assets
In todays world you have to be able to take
care of your own investments Very few people will receive pensions where their employers make all their investment decisions for them
Minimizing Liabilities
There is good debt and bad debt
Taking out loans to buy things that increase in value (like a house) or will let you earn more income (like an education loan) creates good debt Taking out a loan to pay for vacations or stereos
A planning approach
Step 1. Determine concrete goals.
First state your broad goal such as the purchase of a home. Determine the specific pieces to achieve that goal such as the cost of the house, the down payment amount, etc.
A planning approach
Step 3. Evaluate performance.
At least annually, evaluate steps 1 and 2 to determine if any adjustments should be made in the action plan or goals.
Family development (3649) Investment; retirement; income taxes Family maturity (5060) Investment; retirement; estate
Retirement (60?)
When your income is greater than your expenses you add to your net worth
Vice versa when your expenses exceed your income
We need to remind ourselves that financial net worth is not the same as your actual net worth
Discussion Questions
What are some of the benefits of personal financial planning? How do economic cycles affect the personal financial planning process? What is meant by life-cycle financial planning? Explain marginal analysis and its importance to financial decision making. Opportunity cost is a very important concept in financial decision making. Can you think of an example of opportunity cost in your financial planning?
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