[AHRM 2304] - Midterm Exam Guide - Ultimate 16 pages long Study Guide!

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Virginia Tech
AHRM 2304
MIDTERM EXAM
STUDY GUIDE
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Understanding Personal Finance 1/19/2017 5:01:00 PM
Personal Finance
What is it?
o Cash/Credit Management
o Risk Management (fraud, job loss, stock market, managing a
business, life insurance)
o Tax Planning
o Investments
o Retirement Planning
o Estate Planning (death and funeral savings)
Financial Literacy
o Knowledge of facts, concepts, principles, and technological
tools that are fundamental to being smart about money
Financial Responsibility
o Accountability for your financial well-being; taking control of
your finances
Financial Success
o Achievement of financial aspirations; means something
different for everyone
o What is your definitions of financial success?
Financial security
Creating wealth
Financial freedom
Financial happiness
Debt free
Credit cards
o 1 in 3 households carry credit card debt from month to month
Budgeting and savings
o 60% of consumers do not have a budget
o About 1 in 4 (24%) are not paying their bills on time
Financial planning process
Financial planning is an ongoing process it changes as your
financial situation and position in life change
Based on monthly expenses; should have 3-6 months of those
expenses in an emergency fund according to financial planners
Five basic steps to personal financial planning
o Evaluate your financial health
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Create and use financial statements check your
assets, liabilities, income throughout the year
o Define your financial goals
Short term and long term
o Develop a plan of actions to implement goals
o Implement your plan
o Review your progress, reevaluate, and revise consistently!
Economy
System of managing the productive and employment resources of a
country, state, or community
U.S. Federal Government
o Attempt to regulate the country’s overall economy
Subsidies, cutting taxes, health care
The Business Cycle
A process by which the economy grows and contracts over time
Four phrases of the business (economic) cycle
o Expansion
Economy is increasing
Consumers are buying goods and services
Businesses hire more; unemployment rate decreases
o Peak
End of an expansion and the beginning of a contraction
Consumers buy less
o Contraction
The economy is falling
Unemployment rate increases
o Trough
End of a contraction and beginning of an expansion
Recession
A recurring period of decline in
o Total output
o Income
o Employment
o Trade
Usually lasts six months to a year
Double Dip Recession
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