Money Management Guide
Depository Institutions are businesses that provide financial services. The two major ones are commercial banks and credit unions. Commercial banks are for-profit and anyone can join. They offer numerous financial services and usually the largest depository institutions. Credit unions are non-profit and people can only be members if they share the common bond with all the other members. They offer many financial services, but not as many as the banks.
Taxes is a sun of money demanded by a government itself as well as specific facilities or services. The people who pay the taxes by national, state and county government are taxpayers. It is also better to be apart of a community then to be out on your own. Benefits of paying taxes are having roads, a military, government assistance programs, public schools, police and fire departments, recreations, and political leaders. The types of taxes are are federal income, state income, payroll, social security, medicare, property, sales, and excise tax.
Statement of Financial Position
A statement of financial position is a way to describe an individual or family's financial condition on a specified date by showing assets, liabilities, and a net worth. Assets are everything that you owe that has a monetary value. Liabilities are anything that you owe to others. A net worth is a measure of your financial wealth. The question you always want to ask yourself when creating your statement of financial position is 'what is my financial position today?'.
Income and Expense Statement
An income and expense statement is a list and summaries of you income and expense transactions that have taken place over a certain amount of time. It usually goes from month or by year. The question to ask yourself is 'how have I managed my money in the past?'. The three major things you add in your income and expense statement is your income, expense, and your net gain or loss. To figure out your net gain or net loss, you subtract your expenses from your income.
A spending plan helps manage your budget. You say how much you are going to spend on all your categories for that month or year. Creating a spending plan helps you manage your money in a positive way, it can increase your net worth, help set and reach your financial goals, and help you analyze your opportunity costs. Always ask yourself 'what is my future money management plan?'.
10 Important Concepts
- Depository institutions are a must because they keep your money safe.
- Depository institutions can be found everywhere and offer many services that will fit your needs.
- No one likes to pay taxes, but there are many benefits, like: roads, a military, government assistance programs, public schools, police and fire departments, recreations, and political leaders.
- Taxes are an evil necessity.
- A statement of financial position have three major components that are: assets, liabilities, and a net worth.
- Statement of financial positions show where you are now, financially.
- In an income and expense statement, you can see if you are at a net gain or a net loss.
- Income and expense statement show your income and list out all of your expenses.
- A spending plan is the best way to sort out how to manage your money.
- Knowing your financial position and a spending plan, can help you increase your net worth.