Chapter 28: Managing Personal Finances

Opportunity cost

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

Deficit

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

Surplus

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

Personal finance

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

Identify possible courses of action

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

Money management

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

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.

financial decisions

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

Money management

________ is necessary for consumers, businesses, and governments.

Determine your financial situation

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

Develop your financial goals

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

Identify possible courses of action

It is important to consider your options before making a decision

Evaluate your alternatives

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

Implement a financial plan of action

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

Review and revise your plan

You should reevaluate and revise it every year

Inflation Risk

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

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

Income Risk

Your income may rise or fall

Personal Risk

Some choices increase risk

Liquidity Risk

You may have to withdraw your savings or investments