Finance Basic Ludek Benada Department of Finance Office
Finance (Basic) Ludek Benada Department of Finance Office 533 75970@mail. muni. cz
Personal Finance q Monetary decisions of an individual (family). q Analyses how the individuals (family unit) obtain, budget, save and spend money. q The personal income could be allocated towards expenses, saving, debt repayment.
Sample budget Example of budged allocation Category Monthly amount Annual amount Percentage Housing Food Automobile Tax Insurance School Medical Clothing Saving What happened if the total expanses are not equal to the total income?
The phases of personal finance by age n n Phase of of low saving debt investment use accumulated wealth
The phases of personal finance by age Net assets positive Retirement Part-time job, casual job Financing of 25 child’s study Employment, wedding 0 negative Financial planning for retirement Purchase of a car Expenditure on personal health care Repayment of mortgage 50 Child/children Own housing, mortgage 75 age
Personal financial planning q Assessment q Setting goals q Creating a plan q Execution q Monitoring/Reassessment
Personal financial planning Analysis of the financial situation Monitoring/examin ation Execution Definition of goals Creation of financial plan
Saving q. Regular payment over time q. The task is to identify FV Categories of saving: §Long-term §Short-term: § § Ahead a period After a period
Short-term Saving, ahead a period S m x i . . . total amount saved … number of deposits … amount of money … interest rate
Short-term Saving, after a period
Long-term Saving a … annuity (a regular payment of a same amount)
Combined Saving Ahead a period After a period ?
Retirement plan Pension is a way to ensure a regular income for people, which are no longer earning a regular income from employment. Retirement plane (individuals, employers, unions, insurance companies, government).
The main types of income in Retirement plan q Immediate income: § § Ahead a period After a period q Deferred income q Income paid m-times a year q Perpetual income q The task is to identify PV
Immediate Income Ahead a period v … 1/(1+i) D … present value of total income After a period
Income paid m-times in one IP Ahead a period After a period
Deferred Income (ahead a period) vk … postponement of income payment
Perpetual Income Immediately Deferred
Repayment plan Consists of: Debt, Annuity, Interest, Amortization of debt: q Equal annuity q Unequal annuity
Thank you for your attention
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