Unit 14 georgia studies Georgia Economy Study Guide 12 Personal Finance

What is the most important factor when making a money management plan?

Your individual Income.

What can help with personal money management?

Creating a budget can help with personal money management.

Define: Savings

Setting aside income for future use

Why do people save money?

For many reasons, like having money for emergencies, education, to buy expensive things, etc.

What are the benefits of saving money?

Lowers stress, can help build money leading to wealth, allows a person to go after business or personal opportunities.

Define: Debt

Amount of money borrowed from one person or group from another

Why do people develop debt?

Because they are paying for a house, for college, starting a business, etc. Basically just spending more money than they should or can afford too.

What happens if someone has a high amount of debt?

If someone develops too much debt they could be forced to declare BANKRUPTCY.

**Define: Bankruptcy

A legal proceeding involving a person or business that is unable to pay their outstanding debts. The legal proceeding that can result in loss of job or other strong punishment. Basically when people are so much debt that they cannot repay it and the legal system has to get involved.

**Why are personal money management plans important?

They play a vital role in gaining and maintaining ones wealth.

**Define: Budget

A plan for spending

**Define: Credit

An amount of money loaned to a person that must be paid back along with additional interest.

**Define: Expenditure

An amount of money spent, as a whole or on a particular thing.

**Define: Income

Amount of money a person earns during a year

**Define: Interest

Additional amount you pay to use borrowed money

**Define: Investing

Using money in hopes of gaining more in the future by lending to businesses in exchange for a share in profits

**Define: Spending

The amount a person purchases.

**What does a budget include?

Your income and how much money you want to spend.

**What does a Budget compare?

The money you have going in and out.

**What knowledge does a budget provide?

What you can afford to spend and where you need to cut back.

**What are the 3 main components of a budget?

The Income, Expenses, and your savings.

**What is the DEFINITION of a budget?

A finance plan that allocates future personal income towards expenses, savings, and debt repayment.

**Benefits of a budget

Gives you control over your money, keeps you focused on your main goals, helps you stay aware of where your money goes, helps you save for expected and unexpected costs, clarifies areas where you can save money.

**Where to start developing a budget?

Understand your money and how you spend it, make tough decisions about your spending priorities, budget with a lifestyle in mind, build a budget that allows you to save.

**What are some things to remember when budgeting?

Make sure to list your priorities, you can always adjust budgeting goal if priorities change, budgeting takes time patience and effort, if budgte doesnt go as origonally planned dont give up, look for ways to make trackihg yout spendijg and budget easier (like mobilke apps).

**What can happen if you dont budget?

Overspending, fall into a debt cycle, limited spending power, limited savings and invvestments, lack of future security.

**What is Budgeting about and how does it help you?

Budgeting is about saving money, better budgeting can help you end up with more moeny to manage, an accurate budget brings discipline and order to your finances, use a budget to guide important decisions, (earning more than you spend is the best way to a low stress and comfortable life!)

**Why should you save?

For unexpected events or emergencies.

**What is short term savings?

Money set aside for fun things now.

**What are Long term savings?

Money set aside for future investments.

**What is the cost of debt?

Loans usually require the borrower to repay the loan and additional interest. This makes you need to repay the amount you are in debt for as well as additional money.