Money
Management
Strategies
CHAPTER 5
Organizing Financial
Records
CHAPTER 5 SECTION 1
What financial documents
should you keep and
organize?
What are some ways to
organize these documents?
Money Management
• Day-to-day financial activities necessary to
get the most from your money.
• Money trade-offs
Financial Documents
• First step in effective money management is
to organize your financial documents.
• Benefits:
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o
o
o
o
Financial status
Pay your bills on time
Tax reports
Future planning
Investing decisions
Storing Financial
Documents
1. Locate your documents and sort them into
categories such as payroll stubs, savings
account, checking account, bills, etc.
2. Label and file each document
3. Maintain filing discipline
Safe-Deposit Box
• A small, secure storage compartment that
you can rent at a bank.
#1 Personal Financial
Statements
CHAPTER 5 SECTION 2
Personal Balance Sheet
• Allows you to have a complete look at your
financial situation.
• Step 1: Determine Assets
• Step 2: Determine Liabilities
• Step 3: Calculate Net Worth
• Step 4: Evaluate Financial Situation
Pg. 127 in text
Determine Assets
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Liquid Assets
Real Estate Assets
Personal Possessions
Investment Assets
Liquid Assets
• Cash and items that can quickly
be converted to cash.
• $800 in a savings account and $72
in cash
o Your liquid assets are worth $872
Determine Liabilities
• Current (short term debt) - paid within
one year
• Long-term – Debts that require a
longer term of repayment
• Insolvency – the inability to pay debt
when it’s due
#2 Cash Flow
CHAPTER 5 SECTION 2
Cash Flow Statement
• Movement of cash in and out of your wallet
and/or bank account.
• Step 1: Record your income
• Step 2: Record your expenses
• Step 3: Calculate your net cash flow
• Pg. 131 - chart
The next slide lists several
types of accounts.
Categorize each account as
belonging to the personal
balance sheet or cash flow
statement.
1. Take-home pay
2. Transportation
3. Checking Account Balance
4. Groceries
5. Credit Card Balance
6. Investment income
7. Student Loan Payment
8. Mortgage
#3 Your Financial Position
CHAPTER 5 SECTION 2
What is your net worth?
• Deficit – spend more than you earn
• Loans make up for deficit – increases
liabilities
• Surplus – spend less than you earn
• Increases net worth
• Invest – pay off debts – etc.
#4 Preparing a Budget
CHAPTER 5 SECTION 3
Budget
• A plan for spending and investing your
money to meet your wants and needs.
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Step 1: Set your financial goals
Step 2: Estimate your income
Step 3: Budget for unexpected expenses
Step 4: Budget for fixed expenses
Step 5: Budget for variable expenses
Step 6: Record spending
Budget Variance
• The difference between the budget and the
actual amount spent.
Increasing Your Savings
CHAPTER 5 SECTION 3
Increasing Your Savings
• Essential component – open a savings
account
• PAY YOURSELF FIRST!
• PAYROLL SAVINGS DEDUCTION
• SPENDING LESS TO SAVE