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Chapter 8

Chapter 8. Budgets and Financial Records. Financial Planning. Disposable income – . Financial plan – All $$ you receive is _____, ______, or __________. Reasons for Financial Planning. Determine and evaluate options for using $

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Chapter 8

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  1. Chapter 8 Budgets and Financial Records

  2. Financial Planning • Disposable income – • . • Financial plan – • All $$ you receive is _____, ______, or __________.

  3. Reasons for Financial Planning • Determine and evaluate options for using $ • Make sure you use your limited funds for the things you most want. • Prevent careless and wasteful spending. • Organize your financial resources. • Avoid money worries.

  4. Preparing a Budget • Budget – • Money coming in (earnings plus borrowing) must equal money going out (spending plus savings). • A budget should ___________ • Total income =

  5. Steps to Prepare a Budget • - • - • - • -

  6. Typical Monthly Budget • Example budget on page 210 • Estimate income including wages, interest, and investment earnings • Fixed expenses – • Ex:

  7. Typical Monthly Budget • Variable expenses – Ex:

  8. Personal Records • - • - • - • -

  9. Record of Income and Expenses • - • - • - • -

  10. Statement of Net Worth • Assets – Liabilities = Net Worth • Assets – • Liabilities– • If Assets > Liabilities = • If Assets < Liabilities =

  11. Personal Property Inventory • List of all valuable items you own • Include purchase price, and approx. value • Ex: Clothing, furniture, appliances, electronics • Useful in the event of fire, theft, property damage. • Also can take pictures or video.

  12. Tax Records • Keep all tax returns, W-2 forms, and other receipts used for tax purposes. • Keep returns for at least __________. • Could be used in the event of an ____ _______. • Can be audited up to 3 years after filing return.

  13. Legal Documents and Filing Systems • Contract – • Ex: credit plans, mortgages, rental agreements.

  14. Types of Agreements • Express Agreements – • Implied Agreements -

  15. Required Elements of an Enforceable Contract • - • - • - • - • - • -

  16. Elements • AGREEMENT • Mutual Assent – • 2 conditions – Valid offer (intention) and acceptance of exact offer • Counteroffer-

  17. Elements cont. • CONSIDERATION – • Object of value, money, a promise, a performed service. • Each party must receive something of value and/or give something up.

  18. Elements cont. • CONTRACTUAL CAPCITY • Competent parties – • Cannot have a mental deficiency or illness • May not be a minor (limited contractual capacity)

  19. Elements cont. • LEGALITY – • LEGAL FORM –

  20. Elements continued • GENUINE ASSENT – cannot contain any of the following: • Fraud - • Mistake • Duress - • Undue Influence -

  21. 4 Elements of Fraud • 1) • 2) • 3) • 4)

  22. Classification of Contracts • Valid- • Void - • Voidable -

  23. Consumer Responsibilities • Understand all clauses and terms • Keep a copy of agreement • Be sure agreement is dated correctly • Be sure all blank spaces are filled in • Be sure all terms are written clearly • Be sure all numbers are correct • Be sure proper disclosure is made by the seller • Be sure all adjustments are made in accordance with terms of the contract

  24. Negotiable Instruments • Negotiable instruments – • Ex: Cosigner -

  25. Negotiable Instruments • Legally collectable if: 1) 2) 3) 4) 5)

  26. Warranties • Warranty– • All products contain implied warranties– • Specific warranties often guarantee that a product will perform for a certain period of time.

  27. Personal Record Keeping • Paper Filing System – filing cabinet w/ labeled folders • Electronic Record Keeping • Spreadsheet - • Ex: • Database - • Ex:

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