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Total Life Planning
Transcript of Total Life Planning
Project Ch3 . Financial Statement , Tools and Budgets Short - Term Goal Before Budgeting
(1) Set up a Goal E.g.
Purchase iPhone 5
Emergency Need(Get $30000 by this year) Long - Term Goal How ?? SMART GOAL Financial Budgeting S pecific
T ime related Goal Short - Term Long - Term Intermediate Intermediate Goal E.g.
Education(Get a degree within 2 years)
Save $300,000 within 3 years E.g.
-Life after retirement
-Wedding Less than 1 year Before your budgeting
(2) Make and reconcile budget estimate - Estimates projected expenses and revenue
- Resolve conflicting needs and wants by revising estimates Control Spending Start Budgeting After doing the preparation
You can start your budgeting - avoid overspending
- keep track of your daily transactions
- detailed listing of planned expenditure within a single budgeting
(e.g. Food expense: snacks, main meals)
- explain your expenditure purposes
(e.g. Each online transactions: E-banking)
- record credit transactions until receive statements
- avoid overspending on credit items
-recognize the exact amount of indebtedness currently 5. Justify exception to avoid lying yourself
- when budget estimates differs from actual expenses
* expenses: emergency use
(e,g, medical expenses, accidents) 1. Cash-flow statement
-date of making transactions Financial Tools for budgeting: 2. Balance sheet
- Net assets
- Indebtness of all credit transactions
- Financial Status
- Total assets you owned currently 3. Financial Ratios
- Liquidity of your assets
- Current solvency v Evaluation After budgeting (i)Right after budgeting:
-Adding up actual income & expenses
- Budget variance (ii)After that:
Make some corrections to fix with the existed problem
-evaluating the amount of revolving saving funds (iii)Actions after evaluation:
Prepare the new financial plan and budgeting next time in better ways
-Establish another SMART goals
- Increase/Decrease the amount of revolving saving fund,emergency fund 6. Use the envelope system
-placing exact amounts in separate envelopes
-avoid overspending of each particular expenses 4. Keep track of credit transactions 3. Record the purpose of expenses 2. Use a subordinate budget 1. Monitor unexpended balances 1. Control over your finances Aim of budgeting 1. Control over your finance
2. Empowers people to achieve financial goals while confronting any unforeseen events
3. Planning for spending and saving ( Within 1 to 5 years ) ( More than 5 years ) There are two people , Peter and Pan . Peter likes buying the latest model of different brands of mobile phone . But his monthly income is only about $1000 , because of the price of mobile phone is always higher than his income , so he always uses the credit card to purchase . Pan's monthly income is also $ 1000. He also likes buying different brands of mobile phone . But he would save his money for purchasing the mobile phone instead of using the credit card . If you can choose one of the characters , which one do you choose ? 1 . Peter 2. Pan When you choose Peter Because you will not have any money after your retirement , also you need to repay the large amount of debts until you die . And you cannot have wife , your own house , car . - The process of developing & implementing a series of financial plan
-help to manage income & wealth
-help to achieve financial success
Based on: (1) Values (2) Goals (3)Strategies
**to develop everyone's unique financial plan Financial Planning ! (A) Spending
(B) Risk Management
(C) Capital Accumulation
1. Evaluate and plan major expense
2. Manage Debt Effective Personal Financial Planning (C) Capital Accumulation
8. Tax Refund
9. Revolving savings funds
10. Emergency fund
15. Estate planning Case 2 A political scientist Mike Staten Having a terrible time with his budget A regular monthly income from his job No really large bills But he likes spending His credit card balances are increasing Suggestion three budget control methods Problem Solving:
1. He exceeds his budget every month.
Solution: Use the envelope system.
2.His credit card balance are increasing.
Solution: Keep tracking of credit transaction.
3. Set up a emergency fund. (B) Risk Management
3. Medical costs
4. Property and casualty
5. Liability losses
6. Premature Death
7. Income loss from disability He exceeds his budget every month Dennis Sky Siohban Jessica Beta TEAM B A piece of paper electronic document to record the planned and actual income and expenses Suggestion Reduce $ 40 from Food Reduce $ 40 from Child Care Reduce $20 from Clothing Reduce $40 from Entertainment Reduce $20 from Vacations Reduce $ 40 from Automobile gas , oil , maintenance What is budgeting ? Game Time !!!! The story of Stanley and Wendy
-living on a tight budget
-with two children
-not having started an educational savings
-Wendy working on a part-time job
-decided to save $200 per month for the
-Wendy does not want to work more hours
away from home Case3