Personal Finance 7086


Protecting and Managing Resources


8.00 8.03

C3 C3

12% 5%

Apply procedures for managing personal finances. Apply procedures to manage personal income and expenses.

ESSENTIAL QUESTIONS: x What are the principles of financial planning? x What are the elements of spending plans? x What are the steps in the spending plan process, and how is each used? UNPACKED CONTENT

Principles of financial planning (JumpStart Coalition) y y y y y y y y y y y y Money doubles by the “Rule of 72” Your credit past is your credit future Start saving young Stay insured Budget your money Don’t borrow what you can’t repay Map your financial future Don’t expect something for nothing High returns equal high risks Know your take-home pay Compare interest rates Pay yourself first (The JumpStart Coalition,$_Calendar.pdf)

Elements of spending plans y Income---money earned from wages, salaries, tips, withdrawals from savings and investments, interest earnings, scholarships, sales of properties, and gifts y Expenses ƒ Fixed expenses---due by a specified date, often agreed upon in a contract; difficult to change in a short time ƒ Flexible expenses---not due by a specified date; usually these are easier than fixed expenses to reduce or eliminate y Net gain---when one has more income than expenses, the difference between the two y Net loss---when one has more expenses than income, the difference between the two

7086 Personal Finance

Unit D: Managing and Protecting Resources

Summer 2010 Page 408





Apply procedures to manage personal income and expenses.

UNPACKED CONTENT The spending plan process y Set SMART financial goals ƒ Specific ƒ Measurable ƒ Attainable ƒ Realistic ƒ Time-bound Organize ƒ Determine format to use ƒ Select categories for the spending plan ƒ Select a time period Decide ƒ Make realistic decisions and estimates for categories of spending. ƒ If income is less than expenses, decide whether to earn more income, decrease expenses, or a combination of these. Implement---put the spending plan into action Note: Implement and control are to be done at the same time. Control ƒ Records kept as the spending plan is implemented reveal potential problems early, such as overspending in one category. ƒ Use a computer or calculator to check records for accuracy. ƒ Keep a credit spreadsheet to log all credit transactions, including both charges and payments. ƒ Types of control systems 1. Envelope system 2. Spending plan 3. Check register system Evaluate ƒ Determine if the spending plan process has worked ƒ Compare estimated income and expenses to actual ƒ Assess progress toward financial goals ƒ Revise the spending plan (including financial goals) as needed and recycle to beginning of process



y y


7086 Personal Finance

Unit D: Managing and Protecting Resources

Summer 2010 Page 409

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