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Questions and Answers
What percentage of income is recommended to come from savings or investments during the Fine Tuning/Asset Allocation stage?
What is the primary purpose of a Checking Account?
Which step is crucial in managing debt?
What is the recommended percentage to save for retirement?
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What is the benefit of having a joint account?
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What is the purpose of a budget?
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What is a key component of personal finance?
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What is the benefit of reviewing your credit report?
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What type of income is received during the start-up stage?
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What is a recommended strategy to avoid hidden costs in data plans?
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What is a 'DO' in terms of better spending habits?
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When is it recommended to pay with cash?
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What is a strategy to reduce spending on grocery bills?
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What is a reason to review data usage?
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What is a recommended strategy for increasing income?
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What is a recommended strategy for managing debt?
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What is one of the potential drawbacks of not planning your finances?
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What is one way to boost your income?
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What is the first step in creating a budget?
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What is one use for your tax refund?
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When should you reevaluate your budget?
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What is a financial life stage?
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What is a consequence of not doing your budget?
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What is one way to manage debt?
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Study Notes
Personal Finance
- Financial management involves budgeting, saving, and spending monetary resources over time, considering financial risks and future life events.
- "Growing your money is as important as managing it."
- Components of finance include income, taxes, insurance, debt, expenses, wages, retirement, and investments.
Financial Life Stages
- Start-up stage: income source is salary.
- Build-up stage: income from savings and investments (20% of savings).
- Retirement stage: income from savings and investments is the only source to support.
Managing Your Money
- Steps to manage your money:
- Create a budget.
- Understand your expenses.
- Consolidate your debt.
- Create an emergency fund.
- Save 10-15% for retirement.
- Review your credit report.
- Four accounts to use:
- Checking accounts: unrestricted spending, no interest, maintaining balance required.
- Savings account.
- Money market account.
- Certificate of deposits (CDs).
Financial Success
- Keys to financial success:
- Know your financial needs.
- Know how to meet those needs.
- Know how to manage your earnings and expenses.
Budgeting
- Five steps to create a budget:
- Start with your goals.
- Know your income.
- Total your monthly expenses.
- Create a realistic budget.
- Revisit your goals and expenses.
- When to reevaluate your budget:
- Getting a raise.
- Buying a house.
- Getting married.
- Having a baby.
- Recovering from a financial emergency.
- Losing a job.
- Moving to a new city.
- Paying off debt.
Spending Habits
- Dos:
- Buy generic products.
- Use an ordinary ATM.
- Buy stocks instead of gambling.
- Avoid temptation for low prices.
- Start shopping.
- Pay as you go and know exactly what you're spending.
- Don'ts:
- Buy brand name products.
- Use an out of network ATM.
- Buy lottery tickets.
- Buy too many appliances.
- Run a cab.
- Impulse shop.
Avoiding Hidden Costs
- BLOATED DATA PLAN:
- Review your data usage.
- Don't pay for data you don't need.
- Upgrade data plan instead of paying high fees.
- MONTHLY PHONE PAYMENTS:
- Avoid early upgrades.
- OTHER HIDDEN COSTS:
- Impulse shopping.
Joint Accounts
- Advantages:
- Convenience.
- Easy to keep track of bills.
- Teamwork.
- Disadvantages:
- Potential for fights about money.
- Highlights different spending styles.
- No privacy.
- Difficulty to separate.
Income Boost
- Five ways to boost your income:
- Get a second job.
- Freelance.
- Drive around town.
- Join a direct company.
- Rent out your home.
Tax Refund
- Uses for your tax refund:
- Put it towards your retirement.
- Pay off credit and debt.
- Add to your emergency fund.
- Save for big-ticket purchases.
- Buy stocks.
- Invest for yourself (e.g., improve your career).
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Description
Learn about financial management, including budgeting, saving, and spending, as well as components of finance and different life stages.
