FIN 235 SPRING 2013 CHAPTER 1 UNDERSTANDING PERSONAL FINANCE Whats this course about? The US is a fully developed market economy An efficient banking system. An active and liquid securities market. A well defined insurance network. A
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Presentation Transcript
01
FIN 235
SPRING 2013 CHAPTER 1 UNDERSTANDING PERSONAL FINANCE<br>
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What’s this course about? The US is a fully developed market economy
An efficient banking system.
An active and liquid securities market.
A well defined insurance network.
A highly developed system for consumer and business financing
An increasing demand for financial specialists to analyze, manage, and advise.
Our Mission: learning to navigate the economy for our benefit<br>
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UNDERSTANDING PERSONAL FINANCE LEARNING OBJECTIVES
Use the building blocks to achieving financial success.
Understand how the economy affects your personal financial success.
Apply economic principles when making financial decisions.
Perform time value of money calculations in personal financial decision making.
Make smart decisions about your employee benefits.
Identify the professional qualifications of providers of financial advice<br>
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UNDERSTANDING PERSONAL FINANCE Building Blocks to Achieving Personal Financial Success
Spend less so you borrow less and save and invest more.
Define your own financial success and happiness
Use the building blocks of financial success. (See Fig 1-1 on page 6)
Establish your financial bases: banking, brokerage, insurance, job benefits
Define your goals (Short and Long-term), budget, reserve funds
Manage day-to-day expenses
Handling credit, savings, none household costs
Manage your investments<br>
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UNDERSTANDING PERSONAL FINANCE Learn How the Economy Impacts your Financial Success
The importance of understanding the business cycle
Learning about the indicators: leading, coincident, lagging
Understanding the impact inflation on earnings, values, investment returns
Learn to Apply Principles of Economics
Opportunity cost
Marginal utility of [additional income and living costs]
Impact of taxes on financial decisions<br>
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UNDERSTANDING PERSONAL FINANCE Time Value of Money Principles
Simple interest vs. Compound interest
Present values of future income
Future values of savings and investments<br>
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UNDERSTANDING PERSONAL FINANCE Time Value and Wealth Accumulation
There are no real “get rich quick” schemes
Wealth accumulation is the endgame of planning and discipline
Making smart decisions at work
Choosing among tax-free cafeteria plan benefits
Making health plan decisions
Using flexible spending accounts
Employer life, disability and long-term care insurance plans
Using your employer’s retirement plan
Know how and where to get help (need to have goals in mind)<br>
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UNDERSTANDING PERSONAL FINANCE Homework
Do The Math: 1, 2 a & b, 3 b & d
Being you own Personal Financial Manager: 1, 6<br>
