52 Cards in this Set
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Which approaches to wealth would be considered “ethical” and which would be less ethical – examples
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Ethical: pursue a career path and invest, start a successful business, inherit it, marry it, win it.
less ethical: fraud, steal it.
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What are the 3 main decision areas to financial planning?
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Spending, savings, sharing
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Be able to identify examples of short term goals and long term goals
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short term: within next year
Long term: >5 years
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What are the 4 options to alternative courses of action?
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1. Continue same course of action
2. Expand the current plan
3. Change the current situation
4. Take a new course of action
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What are the types of financial risk? What is the difference between them?
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Inflation Risk
Interest Rate Risk
Income Risk
Personal Risk
Liquidity Risk
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Usually the higher the r_____ the higher the r_______ with investments
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risk, reward
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What is commonly purchased to protect oneself from various life risks?
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insurance
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What are the 2 main factors that affect financial goals?
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Time frame & type of financial needs
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What is the difference between consumable purchases, durable purchases, and intangible purchases?
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Consumable: short term (food, clothing, fuel)
Durable: Infrequent purchases (cars, furniture, appliances, computers)
Intangible: Purchase goals (personal relationship, health, education)
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When setting goals, you need to set SMART goals. What does this acronym stand for?
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S - Specific
M - Measurable
A - Action-oriented
R - Realistic
T - Timely : set deadlines
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What were the identified adult life cycle stages discussed? Be able to select an example activity to fit each
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· Graduation (HS/BS/MS/PHD)
· Engagement/Marriage (or Divorce)
· Birth/Adoption of Children
· Career change/Move to new region
· Children leaving home
· Health changes/challenges
· Retirement
· Death of spouse or family memb…
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What were the 4"economies" at work that affect consumers on a day to day basis?
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Global economy
USA economy
Local economy
Family/Personal economy
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What is inflation? Who calculates it? How often is it calculated?
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General rise of prices
Bureau of Labor Statistics
Monthly
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Which adult life cycle stage may be most affected by inflation?
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Old people (fixed income)
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Be able to identify each of these terms from a M/C example – consumer prices, consumer spending, interest rates, money supply, unemployment, housing starts, GDP, trade balance
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· Consumer Prices
o measuring the buying power of a dollar
· Consumer Spending –
o Demand for goods and services by spenders
· Interest rates –
o the cost of borrowing $$ OR the return your investment
· Money Supply –
o Dollars available t…
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Comparing the value of money today with the value into the future is called the t____ v____ of m_____.
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time value of money
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What are the key components needed to calculate TVM?
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Future Value (FV)
Present Value (PV)
Interest Rate (R)
Time Period (N)
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Be able to identify which equation would be used with several TVM scenarios
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FV= PV * (1+r)
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Be able to tell me the r, nper, PV, FV amounts from a scenario listed. [you won’t have to solve any compounding problems!]
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o Where FV =future value
o PV = present value
o r = interest rate per time period
o n = number of time periods in future
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What is the difference between simple interest and compound interest?
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Simple = is calculated on principle only
Compound = is interest calculated on principal plus interest from previous time periods
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What is the difference between discounting and compounding?
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Compounding finds the future value of a present value
Discounting finds the present value of a future value
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How does the "rule of 72" work?
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Divide 72 by the periodic interest rate to find the number of periods required to double the initial deposit.
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What is the difference between a career and a job?
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A job is an employment position obtained mainly to earn money.
A career is commitment to a profession that requires continues training and a path for occupational growth.
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What were the examples relating to common "tradeoffs" and careers?
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-Challenging with personal satisfaction versus making the most money
-Refuse to transfer employment promotion requiring moving families or reducing leisure time
-Opt for part time employment or flexible hours to all time with children
-Give up secure jobs to prefer to operate their own…
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.What is social intelligence?
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Traits that are needed to demonstrate adaptability in the work place
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What is an aptitude?
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Natural abilities possessed by people
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What is an aptitude?
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Natural abilities possessed by people
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"SWOT" is the acronym used in strategic planning. What does this term stand for?
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strength, weakness, opportunity, threat
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What careers are the result from the growth in the number of working parents? what about leisure time? living longer?
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food service and child care. Increase leisure time, results in growth in careers related to personal health, physical fitness, and recreation services
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What are the 3 steps to be researched before starting your own business?
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1. knowledge about your products
2. identify potential customers
3. consider financial sources
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Reaching out to make new contacts related to your career is commonly called________.
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Networking
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What is an elevator speech?
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A short, persuasive, focused summary of your experiences and skills that is conversational, memorable, and sincere
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What is the common term that describes the overall work environment? What affects that?
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corporate cultural and it includes management styles, work intensity, dress codes, and social interaction
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What are the 5 factors commonly considered by college graduates in looking at their first employer?
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Enjoyment of the work, integrity of the organization,
legal assistance,
counseling for health, emotional, and financial needs
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The point in time when your retirement payments belong to you is usually called the v point.
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vesting
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A tax e benefit is NOT subject to income taxes at all, but a tax d _ is simply delaying the payment of taxes owed.
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exempt; deferred
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A good employer commonly assigns a peer to assist you with a first career and that person is called a _____.
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mentor
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Be able to recognize long term vs. intermediate vs. short term needs
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long term: mortgage, car debt, retirement savings.
Intermediate: auto payments, remodeling/furnishing/appliances
Short term: groceries, entertainment, clothing
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Understand the relationship between current spending and the impact on long term – opportunity cost
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spending too much on current needs reduces available money for long-term
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Know the basics of where a safe deposit box is, how it works to provide secure space, and what kinds of items would be likely to keep there.
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At the bank, 2 keys needed to open; on for customer and one for bank. (birth certificate, wills)
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How long do you need to keep records?
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Keep for 2 years (our minimum is 3 years)
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What is the basic math of a balance sheet? What is another name for a BS?
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What you own minus what you owe =
Net worth statment
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Be able to recognize definitions of asset, liability, liquidity, solvency, current, non-current
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asset: cash/tangible property
liability: debt
liquidity: how easily asset is convertible to cash
current: short-term (less than a year)
non-current: more than a year
insolvency: inability to pay debts because debts exceed values of assets
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How long is a BS good for? How often do most people do one? what time of year is typical?
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usually at end of accounting period. end of year
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what goes on left of and right sides of a BS
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Left: assets
Right: Liabilities
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Be able to recognize examples of current and non-current assets and liabilities
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current assets: cash, groceries
non current assets: cars, home, furnishing, land
current liabilities: due and payable within 1 year from the date on the bs
noncurrent liabilities: financial obligations due and payable sometime after 1 year
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Understand what cash flow is and the difficulty of managing a budget with cash flow timing
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cash flow: actual flow or funds in and out of accounts. Bills arrive all month long & until you receive paycheck, you are short of cash
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What is the difference between gross income, take home pay (discretionary), and disposable income
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gross income: total income received each month
take home pay: after federal and state income and ss/medicare taken out
discretionary: after paying for food, housing, utilities, and other necessities
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What is the difference between a fixed expense and a variable expense
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fixed: don't vary month to month
variable: change month to month (food, clothing)
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What are the goals of a household budget?
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live within your income, spend money wisely, reach financial goals, prepare for financial emergencies, develop wise financial management habits
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What is the suggested emergency fund balance for a household?
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3-6 months of living expenses recommended
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What is a budget variance?
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difference between what is budgeted and what is spent
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FCS 233: EXAM 1