FIN1 FTU - Stage 12

F1 – PROJECT-STAGE 12: PERSONAL CREDIT RATING AND PERSONAL CREDITS FOR CONSUMPTION TCHE322 Lawrence J. Gitman, Michael D. Joehnk and Randy Billingsley (2011). Chapter 6, 7 1 Schedule of lectures Project topic covered • Personal credit ratings • Consumption credits Groupwork project activities • Analyze the pros and cons of different consumption loans offered by different organizations • Make decision 2 Personal finance planning process 1. Define financial goals. 2. Develop financial plans and strategies to achieve goals. 3. Implement financial plans and strategies. 4. Periodically develop and implement budgets to monitor and control process toward goals. 5. Use financial statement to evaluate results of plans and budgets, taking corrective action as required. 6. Redefine goals and revise plans and strategies as personal circumstances change. Essential Information of personal financial plans * 1. A summary of the goals 2. Significant assumptions and justification 3. Estimates 4. Recommendations 5. A description of limitations on the work performed • • • • • • Asset acquisition Liability and insurance Savings and investment Employee benefit Tax Retirement and estate 6. The recommendations in the engagement should contain qualifications to the recommendations if the effects of certain planning areas on the client’s overall financial picture were not considered. * Adapted from Paragraph .35, Statement on Standards in Personal Financial Planning Services No. 1 4 GITMAN/ JOEHNK/ BILLINGSLEY 4 Using Credit Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. LEARNING OUTCOMES 1 Describe the reasons for using consumer credit and identify its benefits and problems 2 Develop a plan to establish a strong credit history 3 Distinguish among the different forms of open account credit 4 Apply for, obtain, and manage open forms of credit Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFI4 | CH6 LEARNING OUTCOMES (continued) 5 Choose the right credit cards and recognize their advantages and disadvantages 6 Avoid credit problems, protect yourself against credit card fraud, and understand the personal bankruptcy process Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFI4 | CH6 The Basic Concepts of Credit • Why we use credit • Avoid paying cash for large outlays • Meet a financial emergency • Convenience • Investment purposes • Improper uses of credit • Meet basic living expenses • Make impulse purchases • Purchase non-durable goods Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFI4 | CH6