Personal Financial Planning

Calculating time value of money

1. Formula calculation 2. Time value of money tables 3. Financial calculator 4. Spreadsheet software 5. Websites and apps

Intermediate financial goal

2-5 years

Long term financial goal

5 or more years

Financial plan

A formalized report that summarizes your current finanical situation, analyzes your finanical needs and recommends future financial activities

Annuity

A series of equal deposits or payments

Bankruptcy

A set of federal laws allowing you to either re-structuring your debts or remove certain debts

Financial goal step four

Action to be taken

Durable product goal

Appliances cars sporting equipment

Consumer price index (CPI)

Computed and published by the Bureau of Labor Statistics is a measure of the average change in prices urban consumers pay for a fixed basket of goods and services

Financial goal step three

Determine timeframe

Consumable product goals

Food clothing entertainment

Values

Ideas and principles that a person considers correct desirable and important

Time value of money

Increase in an amount of money as a result of interest earned

Personal financial planning

Is the process of managing your money to achieve personal economic satisfaction

Economics

Is the study of how Will is created and distributed

Opportunity cost

Is what you give up by making a choice

Hidden inflation exist when the cost of________ rise at a higher rate than ______ items

Necessities/nonessential

Intangible purchase goals

Personal relationship health education community service leisure

Financial goal step one

Realistic goals for your life situation

The __________ premium represents the extra amount that you can expect to receive for investing in an instrument due to factors such as expected inflation in the uncertainty of getting your money back

Risk

Financial goal step two

State goals in measurable terms

Future value

The amount of money that will be available at a later date. Also referred to as compounding

Present value

The current value for a future amount based on a certain interest rate and a certain time period also referred to as discounting

Present value

The current value of an amount desired in the future

Adult life cycle

The stages in the family situation and financial needs of an adult

An important personal opportunity cost involves _________

Time

Short term financial goal

Year or less