Personal finance, budgeting, balance, cash flow

1. Personal finance

2. Research areas of personal
finance
 Personal finance (funds) is the
study of personal and family
resources that are important in
achieving financial success.
Spending
Savings
Security
Invest-
ment

3. Glossary
 Financial literacy ?
 Financial liability?
 Asset?

4. Financial planning
1) assessment of financial condition
2) defining financial goals
3) Give an estimate of the cash flow. Development of
an action plan to achieve the goals
4) development of a budget and its
implementation
5) review financial progress and make
appropriate changes

5. Identify current financial situation –
Balance
Asset Liability
Net asset= Asset – Liability
Assessment of financial condition

6. Assets
 The assets section summarizes a list of items valued at a fair price on the
market. This is the current cost that a person who is ready to buy pays to
someone who is ready to sell.
 Types:
 Cash assets (cash equivalents) are a type of asset that is easily converted to
cash, with the same value as current and savings accounts.
 Tangible assets are private property belonging to a person.
 Investment assets are assets spent on the financial market.
monetary tangible investment

7. Discussion about assets like
house, car
 To the according cash
flow / passive income
 To the according for
balance, ability to
close liabilities

8. Liabilities
 Short-term (current) liabilities: personal
loans received from other persons; credit
card; other credit obligations;
 Long-term liabilities: credits; mortgage;
education loan
Short-term
liabilities
Long-term
liabilities

9. Example
 College student Martha's parents presented an
apartment worth 45 thousand dollars.
 Martha has a credit card 2 thousand (payback in 1
year) and a tuition fee 20 thousand for 2 years.
 Determine current net asset.
 Determine the net asset of Martha in 2 years, if
the cost of the apartment will decrease by 32
percent?

10. 2) defining financial goals
Goals amount time
 Assign goals by terms
 Long-term goals
 Mid term goals
 Short term goals

11. 3. Give an estimate of the cash flow.
Development of an action plan to
achieve the goals (budget)
Cash flow
Budget

12. Cash flow parts
Revenues Expenditures
Total Total
Surplus (deficit)

13. Budget parts
Revenues Expenditures
Revenues Expenditures
Total Total
Surplus (deficit)

14. Differences
 cash flow: shows current income and
expenses where you stand financially in
the past tense.
 A budget is a paper or electronic
document that is planned for a certain
period and is used to record your actual
income and expenses. Budget indicates
where you want to be in the future.
 Balance report: evaluates your current
financial situation.

15. References
 E. Thomas Garman, Raymond E. Forg.
Personal finance.
 Khan academy MOOC
 Open2study MOOC