MCS 2100 Chapter Notes - Chapter 1: Financial Plan, Life Insurance, Proactivity
Document Summary
Explorer: some who is always searching through uncharted areas. Passenger: just along for the ride on the money decision making trip of life. Researcher: seeking answers to the inevitable money questions of life. Personal financial planning: the process of managing your money to achieve personal economic satisfaction. Advantages: increased effectiveness in financial resources throughout lifetime. The financial planning process is a six-step procedure: determine current financial situation. Values: ideas and principles that a person considers correct, desirable, and important. What beliefs you hold with respect to money and how these beliefs lead you to act in certain ways. Take a new course of action: evaluate alternatives, consider: life situation, personal values, assess: risk, time value of money. Opportunity cost: what a person gives up by making a choice (time value, not working, health), aka- trade-off. Time value of money: increases in an amount of money as a result of interest earned.