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FIN4901EF Managing Personal Finances
Unit 2 Analysing and Evaluating Personal Information
FIN4901EF.Unit 2

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FIN4901EF.Unit 2

Learning Outcome
1. Explain the interlocking network of financial plans and statements. 2. Prepare a personal balance sheet. 3. Draft a personal income and expense statement. 4. Develop a good record-keeping system and calculate ratios to

interpret personal financial statements.
5. Construct a cash budget and use it to monitor and control spending.

6. Apply time value of money concepts to put a monetary value on financial goals.

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FIN4901EF.Unit 2

Table of Content
• The role of financial statements in financial planning • Personal balance sheet: assets, liabilities and net worth • Personal income and expense statement • The budgeting process

• Tracking financial progress: ratio analysis
• Time value of money

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FIN4901EF.Unit 2

The Role of Financial Statements in Financial Planning
• Financial plans, financial statements, and budgets provide direction by helping you toward specific financial goals. ▫ Financial plans are road may that show you the way. ▫ Financial statements let you know where you stand.

▫ Budgets allow you to monitor and control expenses and purchases in a manner that is consistent with your financial plans. • All three tools are essential to sound personal financial management and the achievement of goals.

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FIN4901EF.Unit 2

The Role of Financial Statements in Financial Planning
• Planning tools that provide an up-to-date evaluation of your financial well-being, help you identify potential financial problems, and help you make better-informed financial decisions. • Measure your financial condition so you can establish realistic

financial goals and evaluate your progress toward those goals.
• Knowing how to prepare and interpret personal financial statements is a cornerstone of personal financial planning.