Chapter 3. Money Management Strategy. What You’ll Learn How to recognize the relationship between financial documents and money management strategies How to create a system to maintain your personal financial documents. Why It’s Important
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How to recognize the relationship between financial documents and money management strategies
How to create a system to maintain your personal financial documents
Why It’s Important
Organizing your personal financial records can help you make informed decisions about your spending.Organizing PersonalFinancial Records
Personal financial documents include your bank statements, paycheck stubs, car titles, birth certificates, social security cards, tax forms, cell phone contracts, and any other documents that record information about how you spend your money.
Organized documents help you:
How to develop a personal balance sheet and cash flow statement
How to analyze your personal financial situation
Why It’s Important
Personal financial statements can give you an idea of where you’re headed financially and where you are now in relation to your financial goals.Personal Financial Statements
The formula to calculate net worth is:
ASSETS – LIABILITIES = NET WORTH
Example: What is Janine’s net worth if her assets are worth $3,000 and her liabilities total $700?
Formula: Assets – Liabilities = Net Worth
Solution: $3,000 - $700 = $2,300
What Net Worth Means
The formula to calculate net cash flow is:
INCOME - EXPENSES = NET CASH FLOW
Example: What is Jason’s net cash flow if his income is $1,500 and his expenses add up to $1,350?
Formula: Income – Expenses = Net Cash Flow
Solution: $1,500 - $1,350 = $150
I think we’ve said and done enough on this topic!
Tells your employer how much to withhold from your paycheck for taxes.
Shows the income you earned from the employer and the amount withheld for taxes.