The Management Of Individual Finances - 1180 Words

Personal Financial Planning The management of individual finances indicates the beginning of financial planning. Financial planning refers to the process of developing a strategy that aids an individual to manage and control their spending and investments to suit their current, as well as future needs. Financial planning is an essential aspect of individuals’ as well as organizations’ continuity. Part A (1) Allison’s cash flow statement Cash Flow Statement Cash Inflow 3000 Expenses Rent 750 Student loan repayment 200 Utilities 150 Food 300 Recreation 600 Car expenses 200 Clothing 150 Total cash outflow 2350 Less total cash outflow 2350 Net cash flow for the month 650 (2) Judy’s Cash flow statement Cash Flow Statement Cash inflow 3000 Less Total Cash outflow 4000 Net cash flow (1,000) Judy can either use a cash-based system or a credit card system to meet her financial obligations. In the cash system, there will be a direct reduction of liabilities because an individual can settle accruing liabilities and bills. The cash based system also increases the assets in case the person acquires an asset. The cash in hand falls under current assets. The use of credit cards increases the liabilities of an individual. Since money spent on a credit card must be paid back to the creditor (bank), it amounts to a liability. Further charges attached to the facility such as interest, as well as service charges, increase the user s liabilities. The use of creditShow MoreRelatedFin 370 Syllabus Essay examples1359 Words   |  6 Pages |Finance for Business | Copyright  © 2012, 2011, 2010, 2008, 2006 by University of Phoenix. All rights reserved. Course Description This course introduces the student to the essential elements of finance for business. 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