个人理财英文版第二章

2. Measure progress toward financial goals
3. Maintain information on financial activities
4. Provide information for preparing tax
forms or applying for credit
tax preparation software • Account summaries and investment
performance results • Computerized versions of wills,
estate plans, and other documents
* Keep a backup!
• Items you refer to often
–Personal and employment records –Money management records –Tax records –Financial services records –Credit records –Consumer purchase and auto records –Housing records –Insurance records –Investment records –Estate planning and retirement records
2-9
How Long to Keep Records
Records
Birth certificates, wills and social security information
Personal property and investments
Documents re: purchase and sale of real estate
Chapter 2
Money Management Skills
McGraw-Hill/Irwin
Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights
Money Management Skills
Chapter Objectives
1. Identify the main components of wise money management
2. Create a personal balance sheet and cash flow statement
3. Develop and implement a personal budget
High is
desirable
Number of months
Liquid assets divided expenses canbe paid in
by monthly expenses an emergency; high is
desirable
Debt-payments Ratio
Monthly credit payments divided by take-home pay
2-5
An Organized Personal Financial Records System
Provides a basis for:
• Handling daily business affairs, such as bill paying
• Planning and measuring financial progress
position • Net worth ≠ cash available
• Insolvency:
–Inability to pay debts when due –Liabilities far exceed assets
2-14
Sample Balance Sheet
2-15
Ways to Increase Net Worth
Create a Personal Balance Sheet and Cash Flow Statement
Benefits
1. Recap your current financial position in relation to the value of items you own and amounts you owe
2-7
What to Keep in a Safe Deposit Box
• Records and items that would be hard to replace:
–Birth, marriage and death certificates –List of checking, savings and financial
- Items of Value
(what you own)
Amounts owed
Net Worth
(what you owe) = (your wealth)
2-12
Components of a Balance Sheet
• Step 1 – List items of value –Liquid assets –Real estate –Personal possessions –Investment assets
2-8
Records on Your Personal Computer*
• Current and past budgets • Summary of checks written and other
banking transactions • Past income tax returns prepared with
• Step 2 – Determine amounts owed –Current liabilities (< 1 year) –Long term liabilities
• Step 3 - Compute your net worth.
2-13
Net Worth
• Assets - Liabilities = Net Worth • Measurement of current financial
Inflows and Outflows
• Cash flow statement = personal income and expenditure statement
• Summary of cash receipts and payments for a given period
Total cash received during the time period
2-11
Balance Sheet
A financial statement that reports what an individual or family owns and owes as of a specific date:
• Also called:
–Net worth statement –Statement of financial position
• Completing required tax reports • Making effective investment
decisions • Determining available resources for
current and future buying
2-6
Records in Your Home File
institution account numbers –Citizenship and military papers –Adoption and custody papers –Serial numbers and photos of valuables –CDs and credit and banking account numbers –Mortgage papers and titles –List of insurance policy numbers –Stock and bond certificates –Coins and other collectibles –Copy of will
Copies of tax returns and supporting data
Retention Period Indefinitely
As long as you own them Indefinitely
7 years minimum 10 years better
2-10
Objective 2
How much of earnings goes to sevice debt; less than 20% recommended
Savings Ratio
Monthly savings divided by gross income
5-10% recommended
2-17
The Cash Flow Statement
Step 2 - Record cash outflows
– Fixed and variable expenses
Step 3 - Determine Net Cash Flow – Use this statement as a basis for creating a spending, saving and investment plan
- Cash outlays
Cash surplus
during the = or deficit
time period
2-18
The Cash Flow Statement
Inflows and Outflows
Step 1 - Record Income
– Net income from employment (Net Pay) – Savings and investment income – Other sources
2-4
Money Management Troubles & Debt
• Getting out of deHale Waihona Puke Baidut: –Evaluate your credit situation –Track your spending –Plan to make payments on time –Consider other income sources –If appropriate, seek assistance
✓ Increase your savings ✓ Reduce spending ✓ Increase the value of
investments and other possessions ✓ Reduce amounts owed
2-16
Evaluating Financial Progress Ratios
4. Connect money management activities with saving for personal financial goals
2-2
Objective 1
Identify the Main Components of Wise Money Management
• Money management = day-to-day financial activities necessary to manage current personal economic resources, while working toward long-term financial security
RATIO
Calculation
Interpretation
Debt Ratio
Liabilities divided by net worth
Low debt is best
Curent Ratio Liquidity Ratio
Liquid assets divided by current liabilties
• Daily spending and saving decisions = central to financial planning
–Must be coordinated with needs, goals, and personal situations
2-3
Components of Money Management