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Chapter 3Money Management Strategy
3.2
Personal Financial Statement
Personal Financial Statement-
Personal financial statements can help you:
Determine what you ____ and what you ____.
Measure your _________ toward your _________________.
Track your financial __________.
Organize _____________ that you can use when you _____________ _____________________________.
The 2 types of personal financial statements are called ____________________ and ________________________.
Personal Balance Sheet
Personal Balance Sheet-
Net Worth-
Things that go on a personal balance sheet:
Assets-
Wealth-
Liabilities-
Net worth
Steps to Creating a Personal Balance SheetStep 1: Determine your Assets
Liquid Assets-
Real Estate-
You would list the property’s___________- the price at which the property would sell
Personal Possessions- must be valuable (used CD’s and old clothes don’t count)
Investment Assets (retirement accounts, stocks, bonds)
Steps to Creating a Personal Balance Sheet
Step 2: Determine your Liabilities
Current Liabilities-
Ex.-
Long-Term Liabilities-
Ex.-
Textbook page 66
Steps to Creating a Personal Balance Sheet
Step 3: Calculate your Net Worth
Step 4: Evaluate your Financial Situation
Textbook page 68 Go Figure
Cash Flow Statement
Cash Flow-
Cash Inflow-
Paycheck, allowance, interest earned in savings account
Cash Outflow-
Cash Flow Statement-
Net Cash Flow-
Steps to Creating a Personal Balance SheetStep 1: Record your Income
Deduction-
Gross Pay-
Net Pay- amount of income in your paycheck ________deductions are taken out
Discretionary Income-
You can spend this money at your discretion.
The higher your discretionary income, the better off you are.
Step 2: Record your Expenses
Steps to Creating a Personal Balance SheetStep 3: Determine your Net Cash Flow
How?- Subtract your EXPENSES from your INCOME
Surplus-
Emergency fund, savings, investment plans
Deficit-
Textbook page 70
Textbook page 71 Go Figure