Personal Finance

3728 WordsMay 20, 201115 Pages
Personal Finance Chris Cannard, Van Trinh, Jommel Esteybar, Edward Sy, Cricket Williams, Trey Vogel San Jose State University Abstract Many people assume that handling personal finances is straightforward and can be done with little to no preparation. This paper delves into the many different aspects of personal finance. It discusses the tools that we are learning in class and explains how these tools that can be used to save for retirement. It offers tips to improve your financial standing both now and in the future. And finally, it compares these tips with advice offered by an expert, Suze Orman. Everyone needs to learn how to properly prepare their finances to reach their goals. While doing so can be easy and rewarding, neglecting…show more content…
When you are ready to make your financial investments, you will need to study your finances to figure out how much to invest which can be done by using a simplified Income Statement. Your income statement will list all of your incomes, debts, and taxes so that you can properly assess how much money you have for future investments (Brigham, 2007). It is critical to account for all of your debts to get a legitimate view of your finances. For instance, do not forget to account for food, gas, cell phone bill, entertainment, and other non-fixed monthly bills. In order to create an investment plan that you will stick to, you must include reasonable living expenses. If you do not include items such as entertainment, then long term acceptance of your investment plan will be dubious at best. Once you have a reasonable income statement created, you will need to figure out your Debt to Income ratio. This is very easy to create with the information you have included in your income statement: add your monthly income and payments and then divide your monthly income by your monthly payments, if your ratio is above fifty percent, than you should work towards lowering your debt with a goal of less than 25 percent (Brigham, 2007). The lower your debt ratio, the higher your credit score will be which will allow you to be approved for loans with better interest rates. Knowing the true interest rate on a loan is

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