Post on 29-Jan-2016
Money 101 | finance-lectures.com 1
Personal money flows
Daniel Folkinshteyn, PhDhttp://finance-lectures.com/personal@finance-lectures.com
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Learning objectives
Describe personal money flows Explain saving and borrowing Distinguish between good and bad debt
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Money flows
Inflows
-Outflows
=Surplus/shortfall
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Inflows
Money you generate via productive activities during a period of time (month, year)
Sources of income: Trading time for money (wage/salary) Entrepreneurial activity (business profit) Passive investment income (interest, dividends)
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Outflows
Taxes Current spending Past spending (debt repayment)
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Surplus/shortage
Surplus
Save for future
Invest
Give it away
Shortage
Spend down savings
Borrow money
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Money flows
Income
stuff
Debtother people
Assets other people
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Present vs future
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Quiz 1
Which of the following are good reasons to borrow money?
Pay for education to improve future earnings Pay for computer to be more productive Pay for new car to replace your old but still
good car Pay for house to reduce your future housing
expenses
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Quiz 1 - answer
Which of the following are good reasons to borrow money?
Pay for education to improve future earnings Pay for computer to be more productive Pay for new car to replace your old but still
good car Pay for house to reduce your future housing
expenses
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Good vs. bad debt
Borrow to consume
Borrow to invest
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Additional reading
Search for "avoiding debt" using your favorite internet search engine.
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Attributions
All images, unless otherwise noted, are sourced from pixabay.com or Wikimedia Commons, and are licensed under CC0, public domain.