Personal Finance (MCS 2100) - Lecture Notes

MCS 2100 -

NOTES




SUMMER SEMESTER

OF 2021

, Personal Financial Planning
INTRODUCTION

Balance sheet gives a picture of current finances ; Cashflow statement
gives an overall picture of where your
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statement ofhowmuchyouareworth income is
coming from what your expenses are
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and how much


Budget >
planforspendingbasedonpastspendingandgoa.IS money youhaveleftattheendofthemonth
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PERSONAL FINANCIAL PLANNING

Process that involves
setting financial goals and Influence of
prevailing economic factors should be considered
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determining how you will achieve them Net worth __
Assets Liabilities
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TIME VALUE OF MONEY

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AKA interest
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Cost of money that is borrowed Orient
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Future value -


computations that yield the amount to which
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Present value computations that yield thecurrentvalueofa
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acurrentsumwillincreasebasedona certain interest rate future sumbasedoninterestratesandperiodofh.me

and period of time

PERSONAL BALANCE SHEET

Lists assets and liabilities liquid Assets easily converted into cash without a significant
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4 types of personal assets :
liquid assets ,
real estate ,
loss of principal

personal possessions and investment assets Investment Assets -

include RESPS ,RRSPs , stocks etc
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term) and
There is current /short
long-term liabilities current liabilities arethosethataredue.in/essthanayear
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CASHFLOW STATEMENT

Financial inflows and outflows period of time Fixed expenses difficult to change in the short-term and
during a
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Variable expenses from month to month are similar from month to month
change
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BUDGETING
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Prediction about future income and
spending