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Personal Financial Statements

Personal Financial Statements. Chapter 16-1. How Much Money Will You Earn in Your Lifetime?. From the  U.S. Census Bureau, Current Population Survey, Educational Attainment 2009 data , in a sample of 100 Americans:55 would have some college: 1 Professional degree 1 Doctoral degree

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Personal Financial Statements

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  1. Personal Financial Statements Chapter 16-1

  2. How Much Money Will You Earn in Your Lifetime? • From the U.S. Census Bureau, Current Population Survey, Educational Attainment 2009 data, in a sample of 100 Americans:55 would have some college: • 1 Professional degree • 1 Doctoral degree • 7 Master's degree • 18 Bachelor's degrees • 9 Associate's degrees • 19 some college, no degree • 45 would have no college: • 31 would have a high school diploma, no college • 14 would have no high school diploma • Combining Work-Life Earnings for Full-Time Employees* with the data above: • Professional Degree: $4.4 million x 1 = $4.4 million • Doctoral Degree: $3.4 million  x 1 = $3.4 million • Master's Degree: $2.5 million  x 7 = $17.5 million • Bachelor's Degree: $2.1 million x 18 = $37.8 million • Associate's Degree: $1.6 million x 9 = $14.4 million • Some College: $1.5 million x 19 = $28.5 million • High School Diploma: $1.2 million x 31 = $37.2 million • Some High School: $1.0 million x 14 = $14.0 million • Total = $157.2 ÷ 100 = $1.572 million or about $1.6 million average life-time earnings

  3. Money Management Basics Money Management refers to the day-to-day financial activities associated with using limited income to satisfy your unlimited needs and wants. ** This doesn’t mean never spending, doing without things, and not having any fun.**

  4. Money Management Basics • It does mean: • Set goals • Make wises decisions • Buy wisely • Live within your income

  5. Personal Balance Sheet • Balance Sheet is a record of Assets and Liabilities at a point in time. • Assets are item of value • Liabilities are amounts owed to others • Net Worth is the difference between a person’s assets and liabilities.

  6. Personal Cash Flow Statements • Personal Cash Flow Statement examines the changes in a person’s net worth. • Cash Inflows is the money you have available to spend as a result of working or from other income • Cash Outflows is amounts spent on food, clothing, transportation, other living cost.

  7. Compare Inflows and Outflows The final step in preparing the cash flow statement is to subtract the cash outflows from the cash inflows If you spent less than you had coming in, the difference represents an increase in your net worth If you spent more than you had coming in, you either had to use some of your savings or had to use credit to pay these additional expenses

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