Personal Finance Exam Pointers

The process of planning and managing personal financial activities such as income generation, spending, saving, investing, and protection.

Your knowledge of facts, concepts, principles, and technological tools that are fundamental to being smart about money.

An individual's ability to understand and manage their finances effectively. It encompasses skills like budgeting, investing, saving, and understanding financial risks.

A systematic approach to matching career goals and individual capabilities with opportunities for their fulfillment.

Methods to protect yourself from unexpected events like illnesses or accidents, and ways to preserve wealth. Includes life and health insurance, estate and retirement planning.

Compilations of personal financial data designed to communicate information on money matters.

Describes an individual's or family's financial condition on a specific date. It shows what you own (assets), what you owe (liabilities), and your net worth.

A document outlining your income and expenses over a specific period, typically monthly or yearly. It helps you understand your financial position and manage your money.

The ratio that shows how much of your assets are financed by debt, helping you decide if you've taken on more debt than your financial situation supports.

This ratio indicates if you have enough assets to cover your debts, helping you understand your financial stability.

A financial tool that measures your creditworthiness, often a 3-digit score, representing your likelihood of repaying borrowed money on time.

Loans given to individuals for personal, family, or household purposes, encompassing a range of items like homes, cars, appliances, and land.

A financial tool that allows you to borrow money up to a specific limit, for purchases or cash withdrawals.

The portion of your income that you set aside instead of spending on consumption.

The process of estimating revenue and expenses over a set period of time, helping to plan and manage your finances.

It represents the total wealth of an individual, company, or household, calculated by subtracting liabilities from assets.

The money you set aside from your income after paying expenses, essentially the "leftovers".

Investing involves purchasing assets, like stocks or bonds, to potentially increase your wealth beyond your initial investment.

Protection refers to actions taken to secure yourself from unexpected events, like illness or accidents, and to safeguard your wealth. This includes insurance and planning for the future.

The first step in personal financial planning is to identify your short-term, medium-term, and long-term financial goals. These could include saving for a house, retirement, education, or a vacation.

Collect all relevant financial information, such as income, expenses, assets, liabilities, and any existing financial plans or investments. It's about knowing your financial situation.

Analyzing your gathered financial information helps you understand your financial strengths and weaknesses.

Put your financial plan into action. This involves taking concrete steps like setting up savings accounts, investing, purchasing insurance, or adjusting your spending habits.

Create a plan that outlines strategies to achieve your financial goals. This includes budgeting, saving, investing, and risk management.