FHCE 3100E Exam 4 ACTUAL UPDATED QUESTIONS AND CORRECT ANSWERS
Why Should You Develop a Personal Financial Plan? Achieve your financial goals
Achieve financial independence
Invest intelligently
Minimize your payments to Uncle Sam
Cover your assets
The Personal Financial Planning Process Step 1: Awareness and Setting Financial Goals
Step 2: Creating and Activating Plans
Step 3: Evaluating and Revising Plans: Moving forward
Step 1: Awareness and Define Your Financial Goals Specifically define and write down your financial goals to reflect your financial
and life situation
Attach a cost to each goal
Set a date for when the money is needed to accomplish the goal
Goals: The Cornerstone of a Financial Plan Goals are based on values, attitudes, and resources available
Goals are impacted by decision making and entice you to keep the plan in effect
Goals provide tangibly for the question, "Why?"
What are the Time Horizons for Financial Goals? Short-term goals can be accomplished within a 1-year period
Intermediate-term goals take 1-10 years to accomplish
Long-term take more than 10 years to achieve
, Step 2: Create and Activate Plans What MUST I do to achieve my goals?
- Cut expenses?
- Increase income?
- Start saving?
- Start investing?
- Career choice?
Step 2: Plan of Action Flexibility: The ability for your plan to change as your situations or goals change
Liquidity: Your ability to convert non cash assets into cash with relative ease and
speed
Protection: Your ability to meet the unexpected large expenses without
destroying your plans
Minimization of Taxes: Your ability to pay as little as possible to Uncle Sam
Step 3: Revise Your Plan Review your progress
Match your plan to your goals
Be prepared to start over if your plan no longer meets your needs
- You suffer a job less
- You win the lottery
Financial Detours Many plans change due to unanticipated events, but generally they change due
to financial life cycle pattern changes
Education It may be the best single investment you will ever make
Your Income: What determines it Earnings determine standard of living
Education is the key factor in determining income level
70% of wealthy householders finished college
Using a Balance Sheet to Measure Your Wealth Personal Balance Sheet: A statement of your financial position on a given date
"the financial polaroid or snap shot" of the PRESENT
Lists your assets and your liabilities
1. Your Assets: What You Own Monetary
Investment
Retirement Plans
Real Estate
Automobiles and other vehicles
Personal property
Monetary Assets Cash or other assets that can be easily liquidated
Examples: cash, checking accounts, savings accounts
Investment Assets Assets that are invested for the future
Examples: Stocks, bonds, mutual funds, cash value life insurance
Retirement Plans Investments by you or your employer to save for retirement
Examples: Pensions, IRAs, 401(k), 403(b), Keogh, or SEP-IRA plans
Tangible asset A physical asset; something you can use, feel, and touch
Why Should You Develop a Personal Financial Plan? Achieve your financial goals
Achieve financial independence
Invest intelligently
Minimize your payments to Uncle Sam
Cover your assets
The Personal Financial Planning Process Step 1: Awareness and Setting Financial Goals
Step 2: Creating and Activating Plans
Step 3: Evaluating and Revising Plans: Moving forward
Step 1: Awareness and Define Your Financial Goals Specifically define and write down your financial goals to reflect your financial
and life situation
Attach a cost to each goal
Set a date for when the money is needed to accomplish the goal
Goals: The Cornerstone of a Financial Plan Goals are based on values, attitudes, and resources available
Goals are impacted by decision making and entice you to keep the plan in effect
Goals provide tangibly for the question, "Why?"
What are the Time Horizons for Financial Goals? Short-term goals can be accomplished within a 1-year period
Intermediate-term goals take 1-10 years to accomplish
Long-term take more than 10 years to achieve
, Step 2: Create and Activate Plans What MUST I do to achieve my goals?
- Cut expenses?
- Increase income?
- Start saving?
- Start investing?
- Career choice?
Step 2: Plan of Action Flexibility: The ability for your plan to change as your situations or goals change
Liquidity: Your ability to convert non cash assets into cash with relative ease and
speed
Protection: Your ability to meet the unexpected large expenses without
destroying your plans
Minimization of Taxes: Your ability to pay as little as possible to Uncle Sam
Step 3: Revise Your Plan Review your progress
Match your plan to your goals
Be prepared to start over if your plan no longer meets your needs
- You suffer a job less
- You win the lottery
Financial Detours Many plans change due to unanticipated events, but generally they change due
to financial life cycle pattern changes
Education It may be the best single investment you will ever make
Your Income: What determines it Earnings determine standard of living
Education is the key factor in determining income level
70% of wealthy householders finished college
Using a Balance Sheet to Measure Your Wealth Personal Balance Sheet: A statement of your financial position on a given date
"the financial polaroid or snap shot" of the PRESENT
Lists your assets and your liabilities
1. Your Assets: What You Own Monetary
Investment
Retirement Plans
Real Estate
Automobiles and other vehicles
Personal property
Monetary Assets Cash or other assets that can be easily liquidated
Examples: cash, checking accounts, savings accounts
Investment Assets Assets that are invested for the future
Examples: Stocks, bonds, mutual funds, cash value life insurance
Retirement Plans Investments by you or your employer to save for retirement
Examples: Pensions, IRAs, 401(k), 403(b), Keogh, or SEP-IRA plans
Tangible asset A physical asset; something you can use, feel, and touch
