FACS 350 (Liberty University)

be able to recognize 10 characteristics

Characteristics of a faithful money manager

evil

“The love of money is the root of all ------”

1. Looking back without regret
2. Looking at the present without envy
3. Looking to the future without fear

Financial contentment

The confidence that you have enough assets or income to work when you want, vacation where you want, and buy what you want

Financial Independence

When money and financial decisions do not dominate your thoughts- when your heart and attitude about money are consistent with biblical principles

Financial Freedom

Refusing to be controlled or tormented by fear, and trusting God even when you don’t have enough money

Financial Peace

as soon as possible

When do you think couples should start taking about finances?

a focus on fully executing each step if a process, not on the potential outcomes or rewards

process thinking

·        Specific

·        Measurable

·        Attainable

·        Relevant

·        Time bound

SMART goals

A widely used decision-making process in the US corporate world, developed by the US government and the RAND Corporation in the late 1950s

Criteria based decision model

Written records of financial activities

Financial Statement

The amount that an actual expense deviates from the forecast or budgeted amount

Variance

A spending plan based in an estimate of income and expenditure for a set period of time

Budget

The cost of giving up other alternatives to make a choice

Opportunity cost

The use of money for the purpose of earning money

Investing

Step one- summarize present situation

Step two – establish financial goals

Step 3 – plan to increase your net cash flow

Step 4 – control your cash flow

Steps of financial planning process

fear, greed

\----- and ----- control financial process

patience and your attitude

Two things that help define how you handle your money

Process of selecting and allocating your limited resources for their most effective use

Financial planning

How much is enough?

Most challenging question

valuation of material possessions and physical comfort as more important than spiritual pursuits or people

Materialism

Vilfredo Pareto observed 80% of land was owned by 20% of people

Pareto Principle

·        Spend less than you earn

·        Give generously

·        Avoid use of debt

·        Maintain liquidity

·        Set long-term goals

Principles of Financial Planning

earned

“never spend your money before you have ----- it” – Thomas Jefferson

·        #1 – repay debt

·        Avoid debt

·        Pay cash, not card

·        Educate yourself

·        Learn to budget

·        Get a grip on taxes

Saving tips

Amount of left over  after taxes, giving and debt repayment

Net Spendable Income

·        Movement of your money through your own personal financial system

·        How your income flows into your bank accounts and flows out to expenses and investments

Cash Flow

o   Money coming in minus money going out

o   If you spend more than is coming in, your cash flow is negative

o   Spend less than you earn

Net Cash Flow

1. Summarize your present situation
2. Establish your financial goals
3. Plan to increase your net cash flow
4. Control your cash flow

Budgeting Process

A snapshot of your current financial situation comparing your assets (what you own) to your liabilities (what you owe)

Financial Statement

Difference between what you own and what you owe

Financial Net Worth