P ersonal Finance

1. PersonalFinance Ece Yavuzbaş Gökçe Uz Tevfik Kumru Kemal Pınarbaşı

2. Outline • Definition • Benefits • Financial position • Adequate protection • Tax planning • Investment and accumulation goals • Retirement planning • Estate planning • Personal Budget • Software Programs

3. It’s not yoursalarythatmakesyourich, it’syourspendinghabits. Charles A. Jeffe

4. Definition of Personal Finance Personal finance is defined as the way in which an individual or a family makes decisions in relation to their financial portfolio. Personal financial plan: a plan that specifies your financial goals and describes the spending, financing, and investing plans that are intended to achieve those goals

5. Benefits of PersonalFinance Personal Financial Planning may not help you to earn more money, but it will help you to use your money more wisely. As part of your personal financial plan, think about what is important to you. What do you want to accomplish?

6. Benefits of PersonalFinance Budgeting Savings Investment Risk Management Cash-flowmanagement

7. Components Financial position Adequate protection Tax planning Investment and accumulation goals Retirement planning Estate planning

8. FinancialPosition • Financial planning needs to understand what his/her/their financial situation is. • Household assets • Household liabilities • Household cash flow

9. FinancialPosition • Develop and implement a budget • Calculate your net worth (wealth) using a balance sheet • Develop a personal income statement and use it to analyze your spending • Introduce budgeting software: Quicken, Mint.com and others

10. AdequateProtection • Protected in event of an emergency must also be in place • Natural disasters and death • Buying insurance for each of these areas • Risk Allocation

11. TaxPlanning Certainties:Taxes and Death Income Value of Assets Single largest expense in a household Tax deductions Credits

12. Impacts of Taxes Goals Budget Cash Management Estate Planning Savings and Debt Taxes Retirement Planning Investing Insurance

13. Investment and accumulation goals • Planning how to accumulate enough money for large purchases • Major reasons to accumulate assets include purchasing a house or car, starting a business ,paying for education expenses and saving for retirement • Major risk to the households, the rate of price increases over time or inflation

14. Investment and accumulation goals • Financial planners suggest regular savings in a variety of ınvestments • The investmentportfolio has to get a higher rate of return • Investors risk attitudes vary from person to person • These types of financial goals require careful planning and secure investments.

15. Retirement planning Personal finance involves planning for your or your families retirement You need to know how much money do you need to be retired and how do you finance this retirement

16. PrivatePension Private pension

17. Private pension This is a long-term investment that are used by intermediaries instead of you When you come retirement age, you obtain a sum of money Payments are deposited to the Takasbank.They are under the control of government You can see your fund fluctuations on web site.

18. Retirement companies

19. Advantages of the private pension A small amount of contribution is paid each month You can earn more money with less money You can determine the degree of risk You don’t need to pay an other fee when devolved into another company Funds are conducted by professional portfolio managers The allocation of funds can be changed six times a year There is no loss of money

20. Disadvantages of the private pension To be long-term investment You have to pay operating expenses like 8% Fund operating deductions are made If you exit the system less than 10 years,10% is interrupted When you evaluating the savings at exchange,you have to pay a tax for earning per tl to the government.however ıf you evaluate the saving at private pension companies, government don’t get a tax from you.

21. Estate Planning • Estate planning involves planning for what will happen when you die, and planning for the tax due to the government at that time. • Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses.

22. PersonalBudget • A personal budget is a finance plan that allocates future personal income towards expenses, savings aand debt re-payment.

23. CashFlowTradeOff’s • Key Cash Management tradeoffs: • 1. The Risk-Return tradeoff • 2. The Spending-Investment Risk tradeoff • 3. The Time Expended-Return tradeoff

24. Softwares

25. Conclusion • How can people protect themselves against unforeseen personal events, as well as those in the external economy? • How can family assets best be transferred across generations (bequests and inheritance)? • How does tax policy (tax subsidies and/or penalties) affect personal financial decisions? • How does credit affect an individual's financial standing? • How can one plan for a secure financial future in an environment of economic instability?

26. ThankYouForYourAttention • Do youhaveanyquestion?