FIN 101, week 2
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This 3 page Class Notes was uploaded by Rachel Rusnak on Tuesday May 10, 2016. The Class Notes belongs to FIN 101 at Ball State University taught by Professor Boylan in Summer 2015. Since its upload, it has received 16 views. For similar materials see Personal Finance for Fiscal Wellness in Finance at Ball State University.
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Date Created: 05/10/16
Personal Finance 101 Professor Boylan 1 Chapter 2: Budgeting. ***on the test*** 1. Fashion Week. a. Most cannot afford to have the best of everything. b. Budgeting can help ensure we make the most of what we have. i. “Being rich isn’t about having a lot of money- but it is about having a lot of options.” 2. Why Do We Budget? a. Advantages. i. Goals. ii. Know where you hare. iii. Makes couples better (on the same page). iv. Make sure there are no problems. v. Spring break. vi. Apartment. b. Disadvantages. i. Takes time. ii. Don’t know. iii. Who cares? iv. More to life than money. c. We need to make sure the ADVANTAGES are bigger than the disadvantag.s 3. What’s the Point? a. Most people are obsolete when completed. b. Why do one? i. It is better to have tried and missed or ii. To have never tried at all. iii. 6/10 families don’t have a budget. 4. Signs You Are In the Middle Class. a. Home ownership. b. Automobile ownership. c. A college education for the kids. d. Retirement security. e. Health care coverage. f. Family vacation. 5. Income statement. +Revenue (money you have earned). +wages earned. +lemonade sales. +interest earned on savings account. -Expenses (money you have spent). –good. –gas. –housing. =Net income (hoe you have performed). 6. Income Statement- Surplus. a. “Surplus”. i. You are getting ahead. ii. You are falling behind. 7. The 3 Major Financial Statements. a. Income statement. i. Measures performance. b. Balance sheet. Personal Finance 101 Professor Boylan 2 i. Tracks net worth. c. Cash flow statement. i. Monitors the movement of cash. 1. Incoming and outflowing. 8. What Determines Your Income? +Education (how much & what type?) +Where you live (city vs. town/ coast?) +Your career (accounting vs. nurse vs. janitor). +Your career planning. +Certifications. -DUI. Income=Value x Time x Scalability 1. More education= more $$ 2. Do something people need= more money paid to you. 3. Bigger decisions= more money to be paid. 9. Income Statement- Deficit. a. “Deficit”. i. You are getting ahead. ii. You are falling behind. 10. “My Money” or “Our Money”. a. Good old days- married couples combined their money. b. Contemporary society (separate accounts) - each person is responsible for “their portion” of bills and is free to spend money as this wish. 11.Spending Plan. a. How do we get our totals? i. You know: 1. Auto payment. 2. Insurance. 3. Home/ rent. ii. You can guess (from previous experience): 1. Food. 2. Entertainment. This you can manipulate for opportunities. 12. Balance Sheet. +Assets (items you own that have value). i. House. ii. Car. iii. TV. -Liabilities (money you owe others). iv. House loan. v. Car loan. vi. Student loan. =Owner equity (for Net Worth). vii. All the things you’ve accumulated throughout your life. 13. Cash Flow. +Beginning balance. +Inflows of cash (when cash comes to you). -Out flows of cash (when cash leaves you). =Ending balance. 14. Style is Superfluous? Why should we be judged – professionally or personally- by what we wear, after all, when we’re so much more than our clothes? Personal Finance 101 Professor Boylan 3 You’re not defined by the dress that you wear, but your dress can provide some insight into who you are (or who you want to be). 15. Different Savings Plans. a. Envelope method (control spending). b. Allowance method (minimize fighting). c. Calendar method (know what is going on). d. “90% Rule” (force savings). i. Save 10% of what is earned. ii. Spend 90% of what is earned. 16. Personal Finance Software. a. Build a budget. i. Quicken- #1. ii. Microsoft. iii. Excel. Track those senses. b. Emergency expenses. i. How much should I have?
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