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HDFS 357: EXAM 1
Financial Planning Process: Step 1
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Determine current financial situation
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Financial Planning Process: Step 2
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Develop your financial goals
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Financial Planning Process: Step 6
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Review and revise your plan
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SMART Goal
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Specific, Measurable, Action-oriented, Realistic, Time-based
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Opportunity Cost
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what you give up when you make a choice
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Influences on Personal Financial Planning - Economic Factors: Supply & Demand
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As demand increases, so does the price
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Time Value of Money
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Increases in an amount of money as a result of interest earned
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Future Value
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The amount to which current savings will increase based on a certain interest rate and a certain time period
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Present Value
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The current value of a future amount based on a certain interest rate and a certain time period
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Assets |
What you own
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Liabilities
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What you owe
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Net Worth
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Assets - Liabilities
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Fixed Expenses
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Set
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Variable Expenses
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Unpredictable
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Truth in Savings Act (3)
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requires disclosure of fee on depots accounts, interest rates, other terms and conditions
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Evaluating Saving Plans
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What is the interest rate, how and when often can money be withdrawn, what are fees?
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Certified Check
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Personal check with guaranteed payment
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Cashiers Check
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Check of a financial institution
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Federal Reserve (The Fed)
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Determines supply of money available and interest rates
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Interest Rate
(Spending, increase, etc.)
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decrease it – more spending, increase it – less spending
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Two Types of Taxes
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Estate, and Income
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Taxable Income
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income, investments, other income (alimony, awards, lottery)
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Standard Deduction
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Set amount on which no taxes are paid
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Audits (3)
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Correspondence – for minor questions
Office audit takes place at an IRS office
Field is the most complex, with an IRS agent visiting you at home, business or your accountant’s office
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Tax Evasion
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Legally not paying all the taxes you owe, such as not reporting all income
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Tax Credit
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(break) Chid care, adoption tax, dependent tax
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Tax Liability
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What you owe to the IRS
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Withholding
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Money taken from paycheck to put into taxes
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Exclusions
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Amount not included in gross income
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