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Mastering Personal Finance: Budgeting, Savings, Debt Management

Learn the importance of personal financial management, budgeting, debt management, and investments. Explore how income, expenses, and cash management impact your financial well-being. Get practical tips on creating a budget and saving for the future.

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Mastering Personal Finance: Budgeting, Savings, Debt Management

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  1. OBJECTIVES Describe the importance of personal financial management Identify the significance of money management and budgeting Create a personal budget Recognize money wasters Identify debt and debt-management resources Describe the importance of savings and investments

  2. FINANCIAL MANAGEMENT Personal financial management: the process of controlling your income and your expenses

  3. FINANCIAL MANAGEMENTIncome Income: money coming in Income may come from: Parents Student loans Job After college, your income most likely will increase

  4. FINANCIAL MANAGEMENTExpense Expense: money going out Common college expenses include: Tuition Text books School supplies Housing Transportation Hobbies and entertainment These are life needs

  5. PERSONAL FINANCIAL MANAGEMENT AFFECTS WORK PERFORMANCE Finances help you reach life goals Keep debt under control Begin a savings and investments plan now Personal financial management can affect your work situation

  6. YOUR PAYCHECK Do not overdo spending Now is the time to manage your money Create a budget to help you reach your goals Financial success begins with discipline and planning

  7. MONEY MANAGEMENTBudgeting Budget: a detailed financial plan used to allocate money for a specific time period Reflects your goals Controls and prioritizes spending Be honest and precise when creating a budget

  8. MONEY MANAGEMENTCash Management Cash management is the key to good budgeting Carry a small amount of cash Be careful about using debit cards Reduce trips to the ATM Write checks instead of using cash Record all transactions

  9. MONEY MANAGEMENTSteps to Creating a Budget Identify goals Attach financial goals to personal goals Determine monthly income (money in) Determine monthly expenses (money out) Budget on a monthly basis Keep track of all spending Reduce money wasters

  10. MONEY MANAGEMENT Fixed expenses: expenses that do not change from month to month Flexible expenses: expenses that change from month to month Money wasters: small expenditures that you do not realize are actually using up a portion of your income

  11. DEBT MANAGEMENT Debt management involves: Debt Interest Net worth Assets Liabilities

  12. DEBT MANAGEMENTSteps to Get Out of Debt Do not create additional debt Prioritize your debt Pay off the smallest amount or the amount with the largest interest first Take the extra cash from a paid-off debt and apply it to the next debt on your priority list

  13. TALK IT OUT What are warning signs that you may be getting into debt?

  14. SAVINGS AND INVESTMENTS Do not wait Rule of thumb: Have at least five months’ income saved for emergencies Have savings in a bank Determine if you should use a regular savings account or a Certificate of Deposit Start investing now

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