2295 Midterm Notes

9 Pages
218 Views

Department
Management and Organizational Studies
Course Code
Management and Organizational Studies 2320A/B
Professor
Chris Torrence

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Description
CHAPTER 1INTRODUCTIONPersonal financial planning The process of managing your money to achieve personal economic satisfactionFinancial planning process 1 Determining your current financial situation 2 Developing financial goals 3 Identifying alternative courses of action 4 Evaluating alternatives 5 Creating and implementing a financial action plan 6 Reevaluation and revising the planValues Ideas and principles that a person considers correct desirable and importantOpportunity cost What a person gives up by making a choiceTime value of money Increases in an amount of money as a result of interest earnedAdult life cycle The stages in the family situation and financial needs of an adultLife cycle approach The idea that the average person goes through four basic stages in personal financial management 30s 30s50s 50 retirement yearsFinancial goals shouldBe realisticBe stated in specific measurable termsHave a time frameIndicate the type of action to be takenSMARTSpecific Measurable Actionoriented Realistic TimelyEconomics The study of how wealth is created and distributedInflation A rise in the general level of pricesCompounding A process that calculates interest based on previously earned interestFuture value The amount to which current savings will increase based on a certain interest rate and a certain time period typically involves compoundingAnnuity A series of equal amounts deposits or withdrawals made at regular time intervalsPresent value The current value for a future amount based on a certain time period also referred to as discountingComponents of personal financial planningObtainingPlanningSaving1
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