FINANCE - FOUNDATION OF MONEY MANAGEMENT

1) Setting goals is one of the steps of the financial planning process. Provide some examples of financial goals that may be important for a family. Select one goal that is important to you and briefly discuss how this goal will influence your future financial planning. 2) Certain behaviors can either assist or hamper reaching financial goals . One such negative source is not controlling or being unaware of spending habits. Review your own personal spending over the past few months. Identify sources of “money leaks”. (A “money leak” can be defined as an “unbudgeted” expenditure - to include going beyond the budget set for the item) . Did the extent and/or category of the money leak surprise you? What might you do to control future money leaks? For reference , here are some short articles on money leaks: 9 Money LeaksLinks to an external site. 7 Money LeaksLinks to an external site. 10 Money LeaksLinks to an external site. 3) What is a minimalist lifestyle ? What may be the impact on expenses, debt, savings and stress if one adopts a minimalist lifestyle ? Would you consider adopting a minimalist lifestyle ? For reference , here are some short and varied articles on a minimalist lifestyle: Minimalist Lifestyle 1Links to an external site. Minimalist Lifestyle 2Links to an external site. Minimalist Lifestyle 3Links to an external site. Minimalist Lifestyle 4Links to an external site. 4) What is consumer credit? List two good reasons to borrow and two unnecessary reasons to borrow. What forms of consumer credit do you have? Which is the costliest? What can you do to lower the credit costs? Suppose you just received your credit card statement and noticed a charge to a store that you have never patronized. What steps should you take to handle this? 5) What common tax-saving methods are available to most individuals and households? Per your chosen or possible career path (position and geographic area), determine the average salary with this tool: SalaryLinks to an external site. Links to an external site. (Use lower band amount if entry level . Entry level is no or little previous work in the field). Divide your salary by twelve. This is your monthly gross salary. Once you obtain the salary information, calculate your actual taxes (make your own assumptions per your personal situation for deductions, etc.) via the Taxact calculator: TaxesLinks to an external site. Links to an external site. Next, use the following Payroll Tax Calculator (CalculatorLinks to an external site.) to calculate your FICA deduction from your annual salary. Take the employee amount (as your employer pays the the other half) and combine with the federal taxes derived in the above step. Deduct this amount from your yearly salary. This is your yearly "after-tax"yearly salary. Divide the after tax"salary by twelve to obtain the monthly after tax salary. What is the dollar difference between your monthly gross and your monthly after-tax salary ? Is the after-tax salary the amount you actually would take home ? Or could there be either more pre or post tax deductions ? list some of the possible pre-tax deductions

Setting financial goals

Financial goals are important for families because they provide a roadmap for achieving financial security. Some common financial goals for families include:

Short-term goals: These goals can be achieved within one year, such as:
- Paying off credit card debt
- Saving for a down payment on a house
- Taking a family vacation
Medium-term goals: These goals can be achieved within three to five years, such as:
- Saving for a child's education
- Starting a business
- Buying a new car
Long-term goals: These goals can be achieved over five years or more, such as:
- Retiring comfortably
- Leaving an inheritance for your children

The specific financial goals that are important for a family will vary depending on their individual circumstances. However, all families should have some financial goals in place in order to achieve financial security. One financial goal that is important to me is to save for retirement. I want to make sure that I have enough money saved so that I can live comfortably in retirement. I plan to achieve this goal by contributing to my retirement savings plan at work and by saving money in a personal retirement account (IRA).

Identifying money leaks

A money leak is an unbudgeted expenditure. It can be anything from going out to eat more often than you planned to buying unnecessary items online. Money leaks can add up over time and significantly impact your financial goals. To identify your money leaks, you can start by tracking your spending for a month or two. This will help you see where your money is going and identify any areas where you can cut back. There are many different ways to track your spending, such as using a budgeting app, keeping a spending journal, or simply writing down everything you spend. Once you have identified your money leaks, you can start to develop strategies for controlling them. Some common strategies include:

Creating a budget and sticking to it
Reducing unnecessary expenses
Automating your savings
Setting spending limits for yourself

Minimalist lifestyle

A minimalist lifestyle is a way of living that focuses on reducing possessions and clutter. Minimalists believe that owning fewer things can lead to a simpler, happier life. There are many benefits to adopting a minimalist lifestyle, including:

Increased financial freedom
Reduced stress
More time and energy
Increased focus on what is important

If you are considering adopting a minimalist lifestyle, there are a few things you can do to get started:

Declutter your home and get rid of anything you don't use or need.
Create a capsule wardrobe of essential clothing items.
Cook at home more often and avoid eating out.
Cancel unnecessary subscriptions and memberships.
Spend more time in nature and less time on electronic devices.

Consumer credit

Consumer credit is a type of loan that is used to purchase goods and services. It can be a helpful tool for financing large purchases, such as a car or a home. However, it is important to use consumer credit responsibly, as it can lead to debt problems if not managed properly. There are two good reasons to borrow money:

To finance a major purchase that you cannot afford to pay for in cash.
To consolidate debt and get a lower interest rate.

There are also two unnecessary reasons to borrow money:

To cover living expenses.
To buy things that you cannot afford.

If you have consumer credit, it is important to understand the terms of your loan, such as the interest rate, the monthly payment, and the repayment period. You should also make sure that you can afford to make the monthly payments. To lower the cost of your consumer credit, you can:

Pay off your debt as quickly as possible.
Get a loan with a lower interest rate.
Consolidate your debt into one loan.
Make a lump-sum payment towards your debt.

Conclusion Financial goals are important for families because they provide a roadmap for achieving financial security. By setting financial goals and taking steps to achieve them, families can improve their financial well-being and build a brighter future for themselves.

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