Personal finance 8th canadian editio by kapoor dlabay hughes stevenson and kerst

PersonalMFinanceM8thMCanadianMEditioMByMKapoor,MDlabay,MHughes,MStevensonMandM
Kerst




Test Bank for Personal Finance 8th
M M M M M




Canadian Edition by Kapoor, Dlabay,
M M M M M




Hughes, Stevenson and Kerst
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, PersonalMFinanceM8thMCanadianMEditioMByMKapoor,MDlabay,MHughes,MStevensonMandM
ChapterKerst
M1M–MAnMIntroduction




 WhyMfinancialMplanningMisMimportant?
o IsMtheMprocessMofMmanagingMyourMmoneyMtoMachieveMpersonalMeconomicMsatisfaction
o Advantages:M increasedMeffectivenessMinMobtaining,MusingMandMprotectingMresources
o IncreasedMcontrolMofMfinancialMaffairs,MimprovedMpersonalMrelationships,MsenseMofMfreedo
m
 UnderstandMhowMlifeMcycleMcanMaffectMplanning
o EarlyMyearsM(upMtoMmidM30’s)
 FocusMonMcreatingMemergencyMfund,MsavingMforMdownMpayments,Mpurchasin
gMlifeMinsurance,Mretirement
o MiddleMyearsM(midM30’sMtoM50’s)
 FocusMonMbuildingMwealthMbyMpayingMdownMmortgageMandMincreasingMsavings
MandMinvestments
o MiddleMyearsM(50’sM+)
 FocusMisMonMprovidingManMadequateMretirementMplan
o RetirementMyears
 FocusMisMonMtheMefficientMmanagementMofMpreviouslyMacquiredMwealth
o CommonMgoalsMandMactivities:
 ObtainMcareerMtraining,McreateMeffectiveMrecordMsystem,MregularMsavingsM
andMinvestmentMprogram,MaccumulateMemergencyMfund,MpurchaseMappr
opriateMinsurance,MimplementMflexibleMbudget,MevaluateMandMselectMinv
estments,MestablishMretirementMgoals,McreateMaMwillMandMestateMplan
 6MStepsMinMtheMFinancialMPlanningMProcess
o StepM1M–MDetermineMyourMcurrentMfinancialMsituation:
 PrepareMaMlistMofMcurrentMassetMandMdebtMbalancesMandMamountsMspentMforMv
ariousMitems
o StepM2M–MDevelopMfinancialMgoals
 AnalyzeMyourMfinancialMvaluesMandMattitudesMtowardsMmoney
 WhatMisMyourMfinancialMdecisionMmakingMprocess?
o StepM3M–MidentifyMalternativeMcoursesMofMaction
 ContinueMasMyouMare,MexpandMorMchangeMtheMcurrentMsituation,MorMtakeM
aMnewMcourseMofMaction
o StepM4M–MEvaluateMAlternatives
 TakeMintoMconsiderationMyourMlifeMsituation,MpersonalMvaluesMandMcur
rentMeconomicMsituation
 OpportunityMcostMisMwhatMyouMgiveMupMbyMmakingMaMchoice
 TheM cost,MreferredMtoM asMtheM trade-•‐

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, PersonalMFinanceM8thMCanadianMEditioMByMKapoor,MDlabay,MHughes,MStevensonMandM
Kerst offMofMaMdecision,McanM beMmeasuredMinMmoneyMorMtime




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, PersonalMFinanceM8thMCanadianMEditioMByMKapoor,MDlabay,MHughes,MStevensonMandM
Kerst  ConsiderMlostMopportunitiesMthatMwillMresultMfromMdecisions
 EvaluateMtheMrisksMfaced
 InterestMRateM–MchangingMratesMaffectingMborrowingMandMbenefits
 InflationMriskM–MrisingMpricesMcauseMlostMbuyingMpower
 LiquidityMriskM–
MdifficultyMofMconvertingMtoMcashMorMsellMwithoutMsignificantMloss
 ProductMriskM–
MproductsMflawedMorMdon’tMmeetMexpectations,MretailersMnotMhonourin
gMobligations
 RiskMofMdeathM–MprematureMdeathMcausingMfinancialMhardship



 RiskMofMIncomeMLostM–MjobMlossMorMinjury
 HealthMRiskM–
MincreasedMmedicalMcosts,MreduceMworkingMcapacityMorMlifeMexpecta
ncy
 AssetMandMLiabilityMRiskM–
MassetsMstolenMorMdamaged,MsuingMforMnegligenceMorMforMdamagesMcau
sedMbyMyourself
o StepM5M–MCreateMandMimplementMaMfinancialMactionMplan
 ChooseMwaysMtoMachieveMyourMgoals,MassistanceMfromMothers
o StepM6M–MRe-•‐evaluateM andMreviseMyourM plan
 PlanMshouldMbeMreviewedMregularlyMbasedMonMlifeMcircumstances
 HowMtoMsetMfinancialMgoals
o InfluencedMby:
 TimingM –Mshort-•‐term,MintermediateMandMlong-•‐term
 NeedsM –
M consumableM productsM (food,M clothing),M durableM productsM (appliances,Mcars,
M equipment)
 LifeMSituationM–Mage,Mincome,Mstatus,Mhousehold,MpersonalMbeliefs,Memployment
 AlsoMinfluencedMbyMgraduation,MengagementMandMmarriage,Mbirth/
adoption,McareerMchangeMorMmove,MdependentMchildren,Mhealth,Mdi
vorce,Mretirement,Mdeath
 SocialM–
MmarriedMatMlaterMage,MmoreMhouseholds/multipleMincomes,MsingleMparents,Mlivi
ngMlonger
o GoalsMshouldMbeMrealistic,MstatedMinMspecific/measurableMitems,MtimeMframe,Mindicate
MtypeMofMactionMtoMbeMtaken
 HowMeconomyMaffectsMdecisions
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