My Money Management Guide
Personal Finance
S.M.A.R.T Goal
Specific: clearly defined end result
Measurable: determine exactly when you will know that the goal has been met
Attainable: create a step-by-step plan outlining exactly how the goal can be reached
Realistic: Consider trade offs and opportunity costs
Time bound: State when exactly you want the goal to be reached by. A shot term goal (less than one year) or a Long term goal (more than one year).
Debt Cards
A plastic card that is electronically connected to the cardholder's depository institution account
Types of accounts at depository institutions
(Depository Institution Businesses that provide financial services)
- Savings accounts:Savings Account An account at a depository institution that is designed to hold money not spent on current consumption
- Checking accounts:An account that allows quick access to funds for transactions
- Credit Union:Depository institutions that offer many banking services and are owned by their customers
Setting A Budget
Spending Plan
A document used to determine the cash flow of an individual or family. A personal spending plan, similar to a budget, helps outline where income is earned and expenses are incurred.
Statement of financial position
A financial statement that describes an individual or family's financial condition on a specified date by showing assets, liabilities, and net worth
Income and expense statement
Lists and summarizes income and expense transactions that have taken place over a specific period of time, usually a month or year
The Basics of Taxes
Taxes –
A sum of money demanded by a government to support the government itself as well as specific facilities or services
Income Taxes
- Income tax - tax on earned and unearned income
- Earned income -money earned from working for pay
- Unearned income -income received from sources other than employment
Payroll Tax
- A tax on earned income that supports the Social Security and Medicare programs (also known as FICA)
Form of Tax
- Sales tax- tax on purchased goods and services
- A percentage added to the original price of an item
- $1.00 item charged 6% sales tax = $1.06
- Excise taxes – taxes collected from the seller or retailer and as such often remain hidden in the price of a produce or service
Net Gain
Add more money to savings or another expense
Net Loss
- Increase income
- Decrease expenses
Values
A fundamental belief or practice about what is desirable, worthwhile, and important to an individual
Needs vs. Wants
- Needs – goods or services that are required for survival
- Wants– the desire for goods and services that can increase our quality of life but are not absolutely necessary for our survival