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Section 4- Personal FINANCE.docx

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Florida State University
ECO 2000
Joab Corey

Section 4: Practical Personal Finance  Real Disposable Income per capita has increased continuously (income going up)  Income increasing = Spending increasing = Saving decreasing  Credit card Debt  Only spend what you have NOW in your bank account  Use Credit cards wisely (due to high interest rates to pay back)  The importance of financial security: o Less conflict in marriage o Better health: Lower levels of stress o Retirement o A greater ability to achieve personal goals  In order to become a millionaire it’s about cultivating wealth, risk taking, and being able to spend efficiently within your own budget.  12 Key elements of Personal Finance: 1) Discover your Comparative Advantage  Discover what you can produce at a lower opportunity cost than other people.  Don’t just think about money but also personal satisfaction 2) Be Entrepreneurial  Remember, in market economy, people get rich by helping others and discovering better ways of doing things.  New products that are highly valued relative to their costs  Entrepreneurial talent involved the ability to discover: Cost- reducing production methods  Entrepreneurial talent involves the ability to discover profitable opportunities that others lover look.  Requires the tolerance for risk: o Entrepreneurial activity and self-employment are riskier than being employed by someone else  This greater risk can translate into higher income and wealth.  Have high savings rates: They are often reinvesting in their business  Work long hours and work more strategically  A free market economy tends to promote entrepreneurshi
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