UA CSM 204 - Exam 1 Study Guide (15 pages)

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Exam 1 Study Guide

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Exam 1 Study Guide


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Study Guide
University of Alabama
Csm 204 - Intro Personl Finan Plan

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CSM 204 Exam 1 Study Guide Lectures 1 5 CSM 204 Exam 1 Review Sheet Definition of Personal Financial Planning The process of managing your money to achieve personal economic satisfaction Goal of Personal Financial Planning Obtain financial security Advantages of Personal Financial Planning Effective managing of resources Obtaining using and protecting your financial resources throughout your life Control of financial affairs Avoiding excessive debt bankruptcy dependence on others for economic security Improved personal relationships Communicating financial goals with those that can help you achieve it Freedom from financial worry Looking into the future and anticipating expenses and achieving personal economic goals Level vs Standard of Living Slide The level of living is they way that we can afford to live today The standard of living is the way we want to live financially Financial planning is working to bring those two closer together Definition of Financial Success Slide The achievement of financial aspirations that are desired planned or attempted defined by the individual who seeks it 3 Components of Successful Planning Specified values Things like reserved emergency account it s not okay to over draw at the bank etc Explicitly stated financial goals Knowing a dollar amount Consistent financial strategies A strategy that MAKES SENSE Steps in the Personal Financial Planning Process and What Occurs in Each 1 Determining your current financial situation Determine income debt and living expenses Prepare a balance sheet and cash flow statement Match financial goals to current income and potential earning power 2 Develop your financial goals Identify your feelings about money Determine the source of your money feelings Mercedes vs Kia example Determine the effects of economy on your goals and priorities Make sure your goals are your own and are specific to your situation The purpose of this analysis to differentiate you wants from your needs 3 Identify alternate

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