Chapter 1 Flashcards
SMART
Specific
Measurable
Attainable
Realistic
Timely
Standard of Living
the necessities, comforts, and luxuries enjoyed by or desired by an individual or family
Quality of Life
tied to our standard of living and several factors impact one’s quality of life
Average Propensity
the percentage of each dollar of income, on average, that a person spends for current needs rather than savings
Wealth
total value of all items owned by an individual, such as savings accounts, stocks, bonds, homes, and automobiles
Income
total earnings over a period of time (e.g. year) from wages, interest, dividends, and other sources.
Wealth/Net Worth
total value of financial assets accumulated minus total debt.
Six Steps Financial Planning Process
Define financial goals
Develop financial plans and strategies
Implement financial plans and strategies
Develop and implement budgets
Use financial statements to evaluate results
Redefine goals, revise plans as circumstances change
Medium of Exchange
We use money to buy items
Standard of Value
the value of items is measured in terms of money
Short term
within a year
intermediate term
the next 2-5 years
long term
6 years or more
Monetary Policy
Seeks to change interest rates and bank lending activity
Fiscal Policy
controls levels and types of taxation
