Indicidual Assignment for Managing Personal Finances
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FIN4901EF Managing Personal Finances
Unit 2 Analysing and Evaluating Personal Information
1. Explain the interlocking network of financial plans and statements. 2. Prepare a personal balance sheet. 3. Draft a personal income and expense statement. 4. Develop a good record-keeping system and calculate ratios to
interpret personal financial statements.
5. Construct a cash budget and use it to monitor and control spending.
6. Apply time value of money concepts to put a monetary value on financial goals.
Table of Content
• The role of financial statements in financial planning • Personal balance sheet: assets, liabilities and net worth • Personal income and…show more content… ▫ All assets regardless of category, are recorded on the balance
sheet at their current fair market value, either the actual value of the asset or the market price, which may differ considerably from their original purchase price. ▫ Four broad categories: liquid assets, investments, real property, and personal property.
Personal Balance Sheet: Assets, Liabilities and Net Worth
• Assets: The Things You Own ▫ Liquid assets: holding in the form of cash or that can readily be converted to cash with little or no loss in value. E.g. cash on hand, savings account, deposit that mature within 1 year, etc.
▫ Investments: such as stocks, bonds, mutual funds, and real estate that are acquired in order to earn a return rather than provide a service.
Personal Balance Sheet: Assets,