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Chapter 3Money Management Strategy

3.2

Personal Financial Statement

Personal Financial Statement-

Personal financial statements can help you:

Determine what you ____ and what you ____.

Measure your _________ toward your _________________.

Track your financial __________.

Organize _____________ that you can use when you _____________ _____________________________.

The 2 types of personal financial statements are called ____________________ and ________________________.

Personal Balance Sheet

Personal Balance Sheet-

Net Worth-

Things that go on a personal balance sheet:

Assets-

Wealth-

Liabilities-

Net worth

Steps to Creating a Personal Balance SheetStep 1: Determine your Assets

Liquid Assets-

Real Estate-

You would list the property’s___________- the price at which the property would sell

Personal Possessions- must be valuable (used CD’s and old clothes don’t count)

Investment Assets (retirement accounts, stocks, bonds)

Steps to Creating a Personal Balance Sheet

Step 2: Determine your Liabilities

Current Liabilities-

Ex.-

Long-Term Liabilities-

Ex.-

Textbook page 66

Steps to Creating a Personal Balance Sheet

Step 3: Calculate your Net Worth

Step 4: Evaluate your Financial Situation

Textbook page 68 Go Figure

Cash Flow Statement

Cash Flow-

Cash Inflow-

Paycheck, allowance, interest earned in savings account

Cash Outflow-

Cash Flow Statement-

Net Cash Flow-

Steps to Creating a Personal Balance SheetStep 1: Record your Income

Deduction-

Gross Pay-

Net Pay- amount of income in your paycheck ________deductions are taken out

Discretionary Income-

You can spend this money at your discretion.

The higher your discretionary income, the better off you are.

Step 2: Record your Expenses

Steps to Creating a Personal Balance SheetStep 3: Determine your Net Cash Flow

How?- Subtract your EXPENSES from your INCOME

Surplus-

Emergency fund, savings, investment plans

Deficit-

Textbook page 70

Textbook page 71 Go Figure