Finance e-magazineChapters 1 - 6

FINANCE MAGAZINE This magazine will show you in a very funny and descriptive way everything you need to know in order to be organized when talking about finance

Juanpi Murua RubioFinance

Personal financial planning

Financial decisions and goals

What’s personal financial

planning?

Arranging to spend, safe and invest money in order to live comfortable, have

financial security and achieve goals

6steps of financial planning

1. Determine your current financial situation

2. Develop your financial goals

3. Identify your options

4. Evaluate your alternatives

5. Create and use your financial plan of action

6. Review and revise your plan

FACTORS THAT INFLUENCE ON YOUR PERSONAL FINANCIAL

PLANNING

There are some factors which can influence

Life situations

Personal values

Economic factors

Opportunity costs and strategies

WHAT IS THE RELATION BETWEEN OPPORTUNITY COST

AND PERSONAL FFINANCIAL DECISIONS?

The relation is the spent of money but the difference between these two major things is that financial opportunity cost is based on your necessities, your health. You must spend that money on your health. Financial opportunity cost is based on your wants instead of your needs.

8 strategies for achieving financial goals at different stages of life

Obtaino Obtain financial

resources by working Plan

o Plan how you’ll spend your money

Spend wiselyo Spend less than what

you earn Save

o Make a savings plan Borrow wisely

o Only when necessary Invest

o Invest either to increase your current income or to achieve long-term growth

Employment and career development

Finances and career planning

IDENTIFY THE PERSONAL ISSUES TO CONSIDER WHEN CHOOSING AND

PLANNING YOUR CAREER

You’ll need to be able to answer all

this questions

What do I do best?

What do I enjoy?

The right fit

There are also stages in order to

4 steps in order to develop a career plan of action

Personal and career interests

Career skills

Career training and education

Employment position

There are 4 main steps to develop a career plan of action, they are listed below

Learn effective strategies to help you get the job or career that meets your personal and financial goals

Obtaining employment experience

Career information sources

Employment and career development

Learn effective strategies to help you get the job or career that meets your personal and financial goals

Obtaining employment experience

Career information sources

Such as working in a Part-time Work

Such as working in a Volunteer work

Internship and cooperative education

Mass media Professional organizations

The internet School guidance office

Community organizations contacts

IDENTIFYING JOB OPORTUNITIES

Job advertisement

Job fairs

Employment agencies

Visit the company

Call the companies

Use the internet to search for one job

Money management strategies

Applying for a job offer

You must make your resume

o Which is a one or two page summary of your education

You must send a cover letter

o Which is a the personal letter that you present along with your resume

o This letter includes all your abilities on writing and presenting yourself as the best person eligible for this work

Considering a job offer

Which factors are the most important considering a job offer?

The work environment

Factors affecting salary

Making employee benefits

ORGANIZING FINANCIAL RECORDSRelationship between opportunity costs and money managementMoney management is the planning of how to get the most from your money.

Opportunity costs is how well are you in your opportunities of earning money.

Different types of relations…

You may be with a high opportunity costs and you may be able to manage your money wisely.

You may be with a high opportunity costs and you may not be able to manage your money wisely.

You may be with a low opportunity costs and you may be able to manage your money wisely.

You may be with a low opportunity costs and you may not be able to manage your money wisely

Simple to set up

Keep important document

s

Not all documents

can be stored

Does not take

much space

It’s a small box rented in a bank

One benefit is that it’s in your home

It’s not protected

against fire,

water or theft

It’s protected

against fire, water and theft

It’s not protected

against fire, water

or theft

ComputerHome files

Benefits of keeping financial records and documents

Safe-deposit box

PERSONAL FINANCIAL STATEMENT

Personal balance sheet

It’s a financial statement that lists items of value owned, debts owed, and a person’s net worth

Cash flow statement

The money that actually goes into and out of your wallet and bank accounts

To find your current worth, you must use a personal balance sheet

There are steps to follow in order to find your current worth…

Step 1

Determine your assets

Types of assets

Liquid assets

Real state

Personal possessions

Investment assets

Step 2

Determine your liabilities

Types of liabilities

Current

Long-term

Step 3

Calculate your net worth

Step 4

Evaluate your financial situation

CASH FLOW STATEMENT: INCOME VS EXPENSES

Record your income Determine your net cash flow

Record your expenses

In order to make a good cash flow statement you must follow some

steps

BUDGETING FOR FINANCIAL GOALSConsumer purchasing and protection

Steps for creating a personal budget

Step 1

Set your financial goal

Step 2

Estimate your income

Step 3

Budget for unexpected expenses

Step 4

Budget for fixed expenses

Step 5

Budget for variable expenses

Step 6

Record what you spend

Step 7

Review spending and saving patterns

A good budget is carefully planned

A good budget is practical

A good budget is flexible

A good budget must be written and easily accessible

Ways to budget

successfully

Factors that influence buying decisionsIt’s divided into 3 main factors

Economic factors

Prices Interest rates Product quality Supply and demand Convenience Product safety Brand name Maintenance costs Warranty

Social factors

Lifestyle Interests Hobbies Friends Culture Advertisements Media (magazines, radio,

television, newspaper)

Personal factors

Gender Age Occupation Income Education Family size Geographic region Ethnic background Religion

Phases in order to buy the best product in the best storeThere are 4 phases in order to buy the best product in the best store

1. Before you shop

2. Weighing alternatives

3. Making the purchase

4. After the purchase

It’s simple

Make a wise decision when it’s about buying a product, especially if it’s

an important or very expensive one

CONSUMER PURCHASING

Resolving

consumer

complaints

Most used complaints by consumers are because

Products that are defective

Unexpected costs

Deceptive pricing

Unsatisfactory repair service

Best way to resolve a

dispute over goods and services?

There are some steps to follow in order to make this the best way of doing it

1. Return to the place of purchase2. Contact the company head quarters

3. Consumer agency assistance4. Dispute resolution

AS AN ENTREPOENEUR, YOU MUST KNOW ABOUT YOUR LEGAL RIGHTS…

What are your legal rights?

If you are unsatisfied with the steps mentioned before (in the heart) you may be able to send the case to a small claims court. It’s a system to settle minor agreements

Banking Financial

services and

institutions

Borrowing

Most people use credit at some time in their life.

Financial institutions offers many options when it is about borrowing money.

You can borrow money for short term with a credit card or personal loan

You can borrow money for long term like for example a car or house.

Payment services

Transferring money from a personal to a business account.

It is a basic function of day-to-day financial activity at a bank.

The most commonly used payment service is a checking account.

Demand deposit is the money that you put into your checking account.

Savings

Safe storage of funds which are ready for future uses.

It is a basic need for everyone, every person needs to safe money in order to have funds for any problem.

Time deposit is the money that it going to be left in a financial institution for months.

Types of financial services

TYPES OF FINANCIAL INSTITUTIONS

Federal deposit Insurance Corporation

Insures each account in a federally chartered bank

Deposit institutions Many people uses these institutions to keep their money safe

Commercial bankSavings and loan associationsMutual savings bankCredit unions

Non-deposit institutions Companies which offers another service

Life insurance companiesinvestment companiesfinance companies mortgage companies

Regular savings account Ideal if you plan to make frequent deposits and withdrawals

Certificates of deposit Money is left in the deposit for a stated period of time to earn a specific rate of return

Money markets account Requires a minimum balance and earns interest that varies from month to month

U.S Savings bonds When you purchase a bond ant you don’t withdraw the money for the specified time you gain the interest needed and you may gain twice the money you had

Savings plans and

payment

methods

There are also benefits

and drawbacks from each

saving plan

TYPES OF CHECKING ACCOUNTS

Regular checking accounts

Usually don’t require a minimum If your account drops below this minimum you’ll have to pay a monthly charge

Activity accounts

You make only few checks monthly You are unable to maintain your balance

Interest-earning checking accounts

Pays interest if you maintain your balance You’ll pay interest if you don’t

How to write a check

The steps on writing a check are simple

1. Write the current date2. Write the name of the party who will receive

the check3. Record the amount of payment in numerals

4. Write the amount in words5. Sign the check in the same way you signed

your signature card at the bank6. Make a note of the reason for the payment.

Consumer credit What’s consumer

credit?

The use of credit for personal needs.

Indicator of consumer spending and demand

Closed and open-end credit

Closed-end credit

One-time loan that you will pay back over a specified period of time in payments of equal amounts

Open-end credit

Loan with a certain limit on the amount of money you can borrow for a variety of goods and services

Sources of consumer credit

LOANS

A loan is money you borrow from an institution and you continue to pay over a period of time with interests. There are different types of loans…

Inexpensive loans

Medium-priced loans

Expensive loans

Home equity loans

The costs and

methods of

obtaining credit

The 5 C’s

Character

Will you repay the loan?

Capacity

Can you repay the loan?

Capital

What are your assets and Net worth?

Collateral

What if you don’t repay the loan?

Credit history

What is your credit history?

Difference between loan

and credit card

The main difference is the loan is for a longer time, the credit card for a

shorter

Monthly payments have an annual percentage rate table

THE COSTS OF CREDIT

It’s divided into 2 types

Simple interest

Interest computed only in the principal, the amount that you borrowed

Simple interest on the declining balance

When the loan is getting smaller, the interest rate is getting smaller.

The warning signs

You make only the minimum monthly payment on credit cardYou are having trouble even making the minimum monthly Payment on your credit card billsThe total balance on your credit cards increases every monthYou miss loan payments of often pay lateYou used savings to pay for necessities such as food and utilitiesYou receive second or third payment due notices from creditorsYou borrow money to pay off old debts You exceed the credit limits on your credit cardsYou have been denied credit because of a bad credit report

THE COSTS OF CREDIT P. 2

Add-on interest

Interest is calculated on the full amount of the original principal

Cost of open-end credit

The seller contacts the buyer, tells him how the price is going to affect the real value, etc.

Cost of credit and expected inflation

Reduces the buying power of money

The minimum monthly payment trap

Smallest amount you can pay and remain a borrower in good standing.

The best the way to protect yourself from fraud and

identity theftThe best way of protecting

your credit is

Keep track of your credit

Protecting your account

Managing my debts

We must be able to determine whether we are in bankruptcy or not. The US bankruptcy has been increasing since 1970…