Personal Finance Unit 1 Chapter 3 © 2007 Glencoe/McGraw-Hill

[Pages:54]Personal Finance Unit 1 Chapter 3 ? 2007 Glencoe/McGraw-Hill

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Chapter 3 Money Management Strategy

What You'll Learn

Section 3.1

Discuss the relationship between opportunity costs and money management.

Explain the benefits of keeping financial records and documents.

Describe a system to maintain personal financial documents.

Section 3.2

Describe a personal balance sheet and cash flow statement.

Develop a personal balance sheet and cash flow statement.

Section 3.3

Identify the steps of creating a personal budget. Discuss the advantage of increasing your savings.

Personal Finance Unit 1 Chapter 3 ? 2007 Glencoe/McGraw-Hill

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Money When You Need It

? Q: Do I need an emergency fund even though I work part time, live at home, and have no bills?

? A: There is no guarantee that your job will always be there for you. If you become sick or injured, you may have to take time off from work. Even if you have disability insurance, it may pay only a fraction of what you earn. If you own a car, you may have unexpected repair bills. Emergency funds are for those unexpected things.

Go to finance07. to complete the Standard & Poor's Financial Focus activity.

Personal Finance Unit 1 Chapter 3 ? 2007 Glencoe/McGraw-Hill

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Section 3.1 Organizing Financial Records

Do you think it is necessary to keep organized hard copies of many of your financial records? Why or why not?

Main Idea

Organizing your personal financial records can help you make informed decisions about your spending.

Personal Finance Unit 1 Chapter 3 ? 2007 Glencoe/McGraw-Hill

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Section 3.1 Organizing Financial Records

money management

planning how to get the most from your money

Opportunity Costs and Money Management

Every decision you make represents a trade-off, or opportunity cost. Trade-offs are especially common when it comes to making decisions about money management.

Good money management can help you keep track of where your money goes so that you can make it go farther.

Personal Finance Unit 1 Chapter 3 ? 2007 Glencoe/McGraw-Hill

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Section 3.1 Organizing Financial Records

Resolving Tough Opportunity Costs

Consider the factors that influence your decision making by compiling a mental list of your options. Then consider how those options fit your:

Values Current financial situation Goal of effective money management By considering these options, you can make better spending decisions.

Personal Finance Unit 1 Chapter 3 ? 2007 Glencoe/McGraw-Hill

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Section 3.1 Organizing Financial Records

Benefits of Organizing Your Financial Documents

The first step in effective money management is to organize your personal financial documents, which include:

Bank statements Paycheck stubs Receipts Automobile ownership titles Birth certificates Tax forms

Personal Finance Unit 1 Chapter 3 ? 2007 Glencoe/McGraw-Hill

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Section 3.1 Organizing Financial Records

Personal Financial Documents

Creating an organized system for handling your personal financial documents helps you:

Plan and measure your financial progress Handle routine money matters, such as

paying bills on time Determine how much money you will

have now and in the future Make effective decisions about how to

save money

Personal Finance Unit 1 Chapter 3 ? 2007 Glencoe/McGraw-Hill

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