Chapter 28: Managing Personal Finances

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Opportunity cost

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A(n) , sometimes called a tradeoff, is what you give up when you make one choice instead of another.

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Deficit

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A(n) occurs when more money is spent than is earned or received.

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20 Terms

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Opportunity cost

A(n) , sometimes called a tradeoff, is what you give up when you make one choice instead of another.

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Deficit

A(n) occurs when more money is spent than is earned or received.

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Surplus

A(n) is extra money that can be spent or saved, depending on a persons goals and values.

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Personal finance

refers to all the things in your life that involve money.

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Identify possible courses of action

: It is important to consider your options before making a decision.

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Money management

is a method of planning to get the most from ones money.

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Interest Rate

: Risk Interest rates rise and fall, which may affect the cost of borrowing or the profits you earn when you save or invest.

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financial decisions

When making , the Internet is a good place to get information on social and economic conditions.

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Money management

is necessary for consumers, businesses, and governments.

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Determine your financial situation

Once you have determined your financial situation, you will be able to start planning

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Develop your financial goals

To develop clear financial goals, you will need to think about your attitude toward money

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Identify possible courses of action

It is important to consider your options before making a decision

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Evaluate your alternatives

When you evaluate your alternatives, use the sources of financial information that are available

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Implement a financial plan of action

A plan of action is a list of ways to achieve your financial goals

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Review and revise your plan

You should reevaluate and revise it every year

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Inflation Risk

Inflation is a general increase in the cost of goods and services

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Interest Rate

Risk Interest rates rise and fall, which may affect the cost of borrowing or the profits you earn when you save or invest

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Income Risk

Your income may rise or fall

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Personal Risk

Some choices increase risk

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Liquidity Risk

You may have to withdraw your savings or investments