...What is financial literacy and why is it important? Financial literacy is the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being. More specifically, it refers to the set of skills and knowledge that allow an individual to make informed and effective decisions through their understanding of finances. Financial literacy involves a number of different areas of understanding. Learning about money and how it works is an important aspect, as well as understanding products like credit, loans, and investments. Competency in managing money appears to be a skill that doesn’t come naturally to everyone. Unless a person is exposed to the practice of money management, he/she is less likely to understand how it works and it long-term benefits. Without a financial education, it is easy to develop poor spending and financial habits resulting in significant negative consequences such as a poor credit rating, denial of credit, rejection for a checking account and bankruptcy, to name a few. Early financial literacy is the best way to prevent such consequences. In essence, personal financial literacy is much more than managing and investing money. It also includes making all the pieces of your financial life fit together. Achieving Financial Success you must understand and determine where your money goes. Here’s how you can start: Analyzing cash flows Taking advantage of opportunity cost. Taking control of your spending. Continued...
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...PERSONAL FINANCE WITH SUZE ORMAN Debt Mistakes to Never Make Again We all make mistakes. What’s important is learning from them. This section teaches you strategies for dealing with debt problems you may already have, and how to steer clear of common debt mistakes in the future. 1 Never borrow more than you absolutely need. There are some good reasons to take on debt: your education, for example, or to buy a home. But even if you are borrowing for a good reason, make it your goal to borrow the least amount possible. The less you owe, the more flexibility you have to focus on other money goals. Don’t be seduced by a lender who tells you how big a loan he can get for you. For example, let’s say you know you can buy a terrific home in a neighborhood you like, and your mortgage will be $800 a month. A mortgage lender says you can qualify for a larger mortgage, for which the monthly payment will be $1,000 a month. “Great!” you think. “We can afford a house with an extra bedroom and a renovated kitchen!” Not so fast. By opting for the less-expensive mortgage, you free up $200 a month to put toward another goal. That’s $2,400 a year you could invest in a Roth IRA for your retirement, for example. In 30 years—the typical time it takes to pay off a mortgage—the $200 a month you managed to save in your Roth IRA could be worth nearly $170,000 at an average annual rate of return of 5%! Debt Mistakes to Never Make Again (cont.) pg. 1 Debt Mistakes Never to Make Again ...
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...Personal Finance Personal finance is “financial planning for individuals. Generally, it involves analyzing their current financial position, predicting short-term and long-term needs, and recommending a financial strategy. This may involve advice on pensions, school fees, mortgages, life insurance, and investments.” This definition truly touches on the key elements of personal finance. It is important to develop a strong in the personal financial planning process, because ultimately it can lead to achieving life goals. By analyzing your current situation and setting a plan with goals you are on your way to a good start. Personal financial planning is the process of managing your money to achieve personal economic satisfaction (Kapoor, pg. 3). By creating a personal plan as your first step, you may benefit in many ways. A financial plan allows you to understand and protect your finances in each step of your life. You are able to be more organized, helping decrease the risk of excessive debt, foreclosure etc. You will also feel more at ease knowing where you are and where you are headed. In order to determine where you are headed in the future you need to begin by setting personal financial goals. There are different types of goals. Goals may be short term, achieved in the next year; intermediate, achieved in two to five years; or long term, achieved in more than five years. These goals should be integrated with each other. Short term goals should help lead you to...
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...Audra Hartlove Professor Rosetty Personal Financial Management 11 September 2012 Week 10 Assignment Page 466: 1. I don't agree to that statement. You should always begin planning for your retirement as soon as possible. It will be more difficult if you wait in your older years. You will also missed most of the tax advantages that come from funding tax deferred retirement plans. it should also viewed as something set in concrete. It is a long term planning that takes into account your family's needs and resources. 2. A qualified retirement plan is when a plan meets all of the governments mandated requirements. That is when the taxes are deferred on employer contributions to the retirement fund and on interest earned by the retirement fund. Taxes don't become due until the benefits of the retirement fund are received by the employee. So, if your real income declines after retirement then the marginal tax rate will likely be lower when the funds are finally withdrawn. 4. Vested benefits are not forfeitable for any reason other than death. If you are fired, or you quit, but in either situation you still retain the right to receive all the vested retirement benefits. ERISA requires all employees to a retirement plan that must immediately best. Under the cliff vesting none of the employer contributions are bested until certain years of service are accumulated after which contributions are one hundred percent vested. Graded vesting gradually vests contributions over several...
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...Putting It All Together FP 101 Brittany Davenport Putting It All Together Financial planning is a good thing, though it can be slightly scary for most people who are not used to thinking and planning their future. Just as a person would not take a cross country trip without a map, they should not just assume that everything will be okay with their finances in the future. A lot can happen to a person and to the economy in general in between the now and however long someone lives, so take the time now to hope for the best but plan for the worst. Most importantly begin showing our children how to manage money effectively, so that they can become the conscious adult that their parent may not have been before now. Looking back, though my own Mother helped me greatly with learning how to budget, the one thing that every teenager should understand is a revolving credit agreement. As an adult it is most important that we understand the best way to transfer our assets in the event of death or incapacitation. As well that we learn how to make our retirement funds multiply so that we can secure funds for however long we end up living or to pass on to our children. My financial behavior underwent a major change during this class. I think that it suddenly dawned on me that I was not letting my money work for me and that I needed to start letting it do so. Learning about available investment options and managers enabled me to choose an investment company...
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...“ All days are not the same. Save for a rainy day. When you don’t work savings will work for you.” -M.K Soni. How does this pertain to seniors in high school and their financial futures? Can saving up now truly benefit you later on? Does saving up a great deal of your money save you later on down the road? What is saving, budgeting, and planning on your financial stability for your future? These are all questions I asked myself that I knew I would use in this essay. Through a set of thorough research, dedication, and thought I came up with one answer that is easy. Saving now will benefit all people, especially seniors in high school. It will help them have no worries on a variety of things, and you won’t have a hassle or worry financially. In this essay I will be giving examples, facts, and prove to you how I am right. Why start saving now, isn’t that what a job is for; providing money for my everyday life? Saving is a systematic plan for the expenditure of a usually fixed resource, such as money or time, during a given period. Imagine if you lost your job, and couldn’t pay your car payment, and/or had no money to buy your everyday needs. You start using a credit card, and end up spending so much that you cannot pay it back on time. What happens to that bill? It builds up interest, and creates an even bigger problem to begin with. Interest is a charge for a loan, usually a percentage of the amount loaned; an excess or bonus beyond what is expected or due. No one wants to...
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...presume that budgeting can control income and expenses, therefore it would help the adolescents to achieve their financial goal. By having a good budget, adolescents can become aware of their financial situation and develop a spending plan to reach the financial goal in the future.(0) Hence, my topic is budgeting for the adolescents. Budgeting is a crucial financial tool, it is also a basis that can assist adolescents in reducing their financial problems.(2) Not only does budgeting help adolescents develop a spending plan and future goals, but it also leads them to acknowledge their income accurately, and develop advanced money management skills for their future planning.(2) 000000 research shows that high school students who had a personal financial education have higher rate of saving their income in comparison to students who didn’t undertake the program.(1) For most students, over 92%, acknowledged that having good money management can surely assist them in living a successful and financially stable life.(1) Task 2 In order to develop good budgeting, there are three factors to consider.( ) The first factor is income and expenses.( ) Identifying the monthly income and expenses are the first things to do in order to have an insight of the current financial situation.(12) All income must be added including allowance, interest and dividends, gifts, and wages.(2) After adding up all the income, then the adolescents need to categorize the expenses in four sections...
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...All about Personal Finance “Money is hard to earn and easy to lose. Guard yours with care.” a quote from Brian Tracy which tells about money just passing by in our hands because of wrong management. Another quote is from Natasha Munson which tells about “Money, like emotions is something you must control to keep your life on the right track.” This means we must know ways to maintain or control our money so that our life will be financially stable. That’s why I will tell you all about Personal Finance to help you manage your money. Personal Finance is about learning to manage income and wealth to satisfy desires in life or to create more income and more wealth. It is about creating productive assets and about protecting existing and expected value in those assets. Personal Finance is very significant to our lives and some of the reasons are; first, it gives us self confidence, because we handle our financial problems under our control and we make more peaceful and better decisions. Second, saving for emergencies, you will not fear of crisis or surprise events which require a lot of money because you are already prepared financially. Third, saving for retirement, this is helpful for future purposes. Personal Finance includes about wealth, but what is wealth? Wealth is the abundance of valuable resources or material possessions of economic value like money, real estate and personal property. An individual, who is considered wealthy, is someone who has accumulated substantial wealth...
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...Your personal finance goals should be catered to your circumstances. It's likely that you're ready to start a family or working towards the goal of having a home. The things you want in your future depend on sticking with your financial goals. 1. Emergency Fund While it's painful to consider, you could lose your job at any moment. Nobody ever plans on losing their job, but you can save money to cushion yourself in case of this kind of traumatic event. It can take up to 6 months to find a new job and get settled into the new position. so your emergency fund should cover 6 months of your current salary. 2. Start Thinking Retirement As you're considering that emergency fund, it's time to start thinking about your retirement. Whether you're...
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...Unit10- Personal Finances Marc Wilks Kaplan University MM 212 Professor Heather Bullard October 3, 2015 Having an understanding of basic financial principles is essential for anyone who wants to exercise control over their personal income. Without it, how can anyone plan how to pay for next month’s bills, much less plan for retirement? I learned that a basic knowledge of financial basics is essential if I was to have any chance of being able to make the most of my personal income (LaPonsie, How to Stop Living the Paycheck to Paycheck Lifestyle August 6, 2015). I had my first exposure to basic personal finance the last half of my senior year of high school. I learned about how balance a checkbook, income versus debt, and a little about interest. I did not start to actually use this knowledge until I was out of school and moved out of my parent’s home. When I moved into my first apartment, I was forced to create a budget. I needed to get a good idea of how much money I had coming in and the best way to make that money cover my expenses. When I was married to my first wife, I learned how to operate within a two income budget. This came with its own set of challenges as we had double the expenses to cover. My wife, well ex-wife handled most of the finances but I did manage to learn a thing or two. This experience came in handy when we got divorced and I was solely responsible for my financial matters. I think that to...
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...Personal Finance It is important to plan the finance for any regular expenditure such as the basic needs of any person like food, clothes, accommodation, bills etc. To be able to for fill all your personal needs you must have some kind of personal income, which will cover these expenses. The sources of personal income might be: Salary or wages =============== A regular earned income from employment, for these earnings the employee and the employer both have to pay a deduction to the government such as income tax and N.I. contribution. Overtime An extra earned income for the additional hours of work Commissions ----------- An employee can get a percentage of the selling price of product from his/her employer. Bonus ----- Bonus is an earning for good performance at work place. Interest -------- Interest using your money to create more money, expressed as a rate per period of time, usually one year, in which case it is called an annual rate of interest. Winnings -------- You may win money from playing the lottery or gambling on sport events. Gifts ----- Money received from a friend or relative on a special occasion such as birthday. Sale of personal items ---------------------- Earned income from selling personal items Gross and net pay ----------------- Gross pay is the total amount of money earned by an employee before any deduction is made. Net pay is the amount of money an employee receives after...
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...Personal finance Assignment Student Number 09005308 Question 1 a) Buying a house in the UK typically takes 12 weeks, which is twice the amount of time it takes in other developed countries (Home.co.uk. 2010). Home.co.uk (2010) is an independent property search engine and believes there are seven stages to buying a house, as shown below: 1) How much can you afford and get a mortgage agreement in principle - it is important to find out how much you can borrow to give you an idea of what type of house you will be able to afford. Also, speak to a mortgage advisor to find a mortgage that will suit you. 2) Choose your home – View several properties before choosing your home. 3) Hire a solicitor – the average cost for solicitor is £1060 (guardian. 2008), therefore get more than one quote from solicitors. 4) Make an offer – this is normally done through the estate agent. 5) Do any survey and valuations- many mortgages required you to take a variety of surveys and a valuation. 6) Exchange contracts- at this point you will normally exchange contracts and hand over a deposit for the house. 7) Finalise your contract details and move in b) A mortgages process is a long process and can take between 6 to 10 weeks (shire direct. 2010). The process can also be very complex, therefore the Consumer Financial Education Body (2010) have spilt the process into four simple stages as shown below: 1) The first stage is to get advice from a financial...
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.... Nick Browns and Daisy both had income in 2012. Nick is a doctor for Royal hospital and made $135,000 in wages while Daisy worked as a banker and also earned annual salary of $75,000. The Browns received $4,500 in interest on savings account. They had invested in two types of bonds: 20-year corporate bond from Google and state of Pennsylvania revenue bond. During the year 2012, they received interest income from these two bonds, $1,800 from Google and $1,500 on the state bond. At the moment Nick is still paying for his student loan and he paid $4,500 in interest on his student loan in 2012 and Daisy is taking a course in MBA specialized in Banking Operation as she desired to get to higher position in her career. She paid $3,250 in tuition in 2012 In addition, they also sold some G.E stocks for $25,000 that had been purchased ten years before for $5,000. Six years ago, they invested $30,000 in some real estate property in some rural area with the expectation that those areas would thrive today. However, due to the economic downturn, their investment has decreased in value dramatically. They decided to sell those lands in 2012 to prevent themselves from extra loss. They received $15,000 from the sale. The Browns paid $20,200 in mortgage payments of which $14,800 was interest and the rest reduced principal. They paid real estate taxes of $5,750 and state income tax of $18,500 during the year. They contributed $3,500 to their state Education fund and $3,000 to the support...
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...Not only having, but enforcing good spending and savings habits as well as understanding your investment and retirement needs will only ensure a happy and healthy lifestyle. I have learned over the last 8 weeks that I had a decent plan but had much needed room for improvement. My current financial situation lacked a quality and realistic budgeting plan that enabled me to save and reduce, reoccurring, debt. To fix this I have simply constructed a new budget that will allow me become debt free in about 8 months by applying some of those lazy dollars along with my current payments. However once one debt is paid for in full I will take the money that was paying that debt and apply it towards another one, which in turn helps get rid of all those bad investments into credit card companies. All the while, as I stated in week 5, every 6 months I will continue to call my insurance company to keep updated on all insurance policies. Making this a priority do to the fact that it has seemed that every time I call I am either missing coverage or lack thereof or am paying for coverage I don’t need. Consistency and things I personally can affect is the road path that I chose to take. This is why I am not willing to invest mass amounts of money in the stock market, I can see playing with small amounts to try and get the fill for it, but I don’t have the knowledge to strategically invest and don’t see the point in hiring an investor to manage my portfolio unless I think that I will get...
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...1. What is the most important thing that you can do when saving money? Financial Expert Michelle Singletary believes that putting money aside each week is key to a successful budget. 2. What is a subsidized loan? There is generally no interest until the loan is due. 3. What are some of the financial challenges that individuals face when they first live on their own? They do not put their money where it needs to go. They need money for rent and groceries. They buy extra stuff like $6 coffee. They have toi be able to have enough money to pay their bills and take care of themselves first. 4. How can you prepare to manage your money on your own? You can keep everything that is important and you also need to budget each week. You should keep important...
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