Financial Literacy 7-8
Documents you should keep and double check:
-Checking account Statements. Keep them for 1 year and then shred them -Savings accounts and Investment statements -Pay stubs -Tax Documents- hold on to tax returns for 7 years -Credit card or Loan statements -keep for a year -Receipts or warranties
What are the reasons a business can fail?
-Management shortcomings -Inadequate financing due to over-optimistic sales projections -Misreading the market and inexperience
Why are many Americans in debt? What is instant gratification?
Many Americans are in credit card debt because they opt for instant gratification, which is buying something as soon as you see it.
How long are short-term goals? What do you use to save up for them?
They are 0-3 months long. You use money market account or savings account to save up for it.
How long are intermediate goals?
They are 4 months to 1 year long
What is a Periodic/Occasional Expense? What are types of Periodic expenses?
They are expenses you don'y pay each month, but can be fixed or variable. Example: college tuition and outfit for prom
How long are long-term goals? What do you use to save up for them?
They are longer than 1 year. You can use retirement plans, bonds, stocks, etc. to save up for them.
What are expenses?
They are what you spend money on (your needs and wants)
How can personal values affect your financial plan?
They can determine what you consider needs and wants. They impact the choices you make with money. When you examine your values you may find needs disguised as wants. This can keep you from reaching your financial goal.
When should you review your financial plan and goals?
View them monthly, or when you have significant changes in your life like the birth of a child, moving to a new city, or buying a home. You may need to create a new budget.
How will financial plan change over time?
When you get a full time job with a higher salary. Your financial goals will adjust as income changes. Spending habits will also change as you earn money. More you earn, the more you will spend.
What do you do when you make a financial goal?
You chart your future and decide what you want to accomplish and when
What will happen if you do not create a financial plan?
You may always worry about having enough money for the things you need and want.
How does the envelope system work?
You put the amount you have to spend each week on different expenses into different envelopes. When you need to spend money, take it out of the appropriate envelope. When envelope is empty it means your done spending in a certain category.
What you do when you create a financial plan is_____________
You set short-term, mid-term, and long-term goals, develop a plan to achieve them, and put the plan into action.
A student needs _____________ to start on the path to a professional career
education
What is the most important part about budgeting?
Saving is the most important part about budgeting. Always pay yourself first when setting priorities. Put savings into savings account right away.
What factors influence financial planning decisions?
life situations, personal values, and economic factors.
What do you base your financial goals off of?
needs, wants, income, and expenses.
What resources are available to assist you in making financial decisions?
printed material, financial institutions, school courses and educational seminars, online resources, and financial specialist.
Avoid____________ financial goals
vague
What are the aspects of SMART goals?
Specific- clear and well-defined Measurable- is it obtainable and when it is to be achieved Attainable-Goals that are important to you Realistic-Within availability of resources, time, knowledge Time Based- enough time to achieve goal or Tangible- can experience it with one of your senses
What are needs?
The basic necessities of life
What does the government decide on public budgets?
The government decides how much revenue to raise, how to raise it, how to use funds to meed country's needs, from security to improving health care to alleviating poverty.
What is the benefit of having more education?
The more education you have, the more skills you have and the more you will earn.
The steps for creating a budget:
1) Decide whether to track budget weekly or monthly 2) List all income (salary, allowance) and then total it up 3) List all expenses, including putting money into savings 4) Subtract income from expenses and if anything is left over consider adding it to your savings. 5) Review your budget
What are the steps to find out where your finances currently stand?
1) List assets (cash, CDs, investments, value of house, car, personal property, etc.) and add up total. 2) List you liabilities (current unpaid balances) 3) Determine personal net worth
Things you should do while shopping to not spend a lot of money
1) Take a shopping time out (take out which items are the lowest value to you) 2) Find the "fluff" and eliminate it 3) Be aware of the result of your spending decisions 4) Use reminders
What are the 5 financial planning process steps?
1) Understanding needs and wants 2) Assessing your current financial situation 3) Developing your financial goals 4) Creating a Budget and following it 5) Monitoring and modifying your financial plan
What meets your basic needs and helps you reach those financial goals?
A budget
What is a budget?
A budget is a plan for managing the money during a given time period. They are a very important part of business because they are a tool for performance evaluation at the end of a specific time period.
What is a career?
A career is an occupation or profession, usually requiring special training and often becomes one's lifework.
What is a fixed expense? What are types of fixed expenses?
A fixed expense costs the same amount every time. You typically know how much is needed each month for a fixed expense. Examples are home mortgage, guitar lessons, car payment.
When will your budget change?
As your priorities change and income grows
How do you find personal Net Worth?
Assets-Liabilities=Net Worth
What are the methods to track your budget?
Can create a budget spreadsheet, use financial software, or even keep track with cash register., and envelope system. You should list your expenses as you make them.
How will making a plan help you?
It will help you manage your money effectively, avoid debt, bring a sense of freedom from financial worries obtained by looking to the future, and achieve financial goals.
What is a Variable Expense? What are types of variable expenses?
A variable expense is an expenses that fluctuates in amount, so you have more control over how they will be. Food is an example because it depends on how much/less frequently you eat out. Example: Groceries, Dinner at restaurant.
What is a personal financial plan?
It is an important component of money management that can help you meet the financial needs you have today while you plan for future dreams.
What is a job?
It is anything a person is expected or obliged to do, a duty or responsibility.
What is delayed gratification? When do you need to use it?
It is giving up something so you can save for a future goal. You will need to practice it if you have an intermediate or long term goal.
What are personal and financial opportunity cost?
It is what you give up by making a choice. Personal opportunity costs are time, knowledge, skills, and health. Financial opportunity costs are how much you save, spend, and invest.
What is cash flow?
It measures the money you receive and the money you spend.
What are wants?
Things that make life more interesting and fun.
What impact need and wants and shaped your financial goals?
Values
What are personal values? What can influence your values?
Values are the beliefs and practices in your life that are important to you. Things that can influence your values are family members, friends, religion, things you read, and the experiences you have. Your values will change overtime.
What are the characteristics needed to be a good entrepreneur?
self-disciplined, have initiative, and don't mind taking calculated risks.