Personal Finance

Rebecca McKenney
Personal Finance
Mr. Thornberry
7 November 2016
Short Answer Part 1
1. Financial planning is the process of managing your money which can help you be financially stable, while still accomplishing your goals. There are six steps to this process. First, you need to determine your current financial situation in order to see what you have to work with. Next, you need to determine what you want your financial goals you want to accomplish. After you decide what your goals are, you need to determine is you need to make amendments to your current lifestyle or if there are no changes needed.
When determine if change is needed, by sure to evaluate all available options. Each choice has a risk and opportunity cost, so which are you

There are many advantages and disadvantages when using credit. Advantages include convenience when shopping and returning goods, ability to pay for services and goods immediately upon approval, you may get an advanced notice on sales, and may help provide for medical evacuation for travelers in emergencies. But eventually, you will need to pay back what you borrowed. The use of a credit card can lead to the illusion of an increase of spending power leading to overspending. Overspending can lead to relationship problems can cause you to pay more than what you bargained for, and could possibly leave you bankrupt. (Page 190 –

A savings account is a basic way to save money through a bank, in which you can withdraw at any time. A certificate of deposit is where you can leave a specific amount of money on deposit for a specific amount of time for a certain interest rate. A corporate bond is written pledge a corporation writes that agrees to repay a specified amount of money with interest. A mutual fund is a savings plan that is managed professionally with a vast diversification that is funded by shareholders. (Page 166, 523, 557) 10. When investing for short-term. Intermediate, and long-term purposes, there are many possible ways to achieve these goals. For a short-term goal, I think that a savings account is the best way to invest. Since you plan on your goal being accomplished in a year, you can compound interest on the regular bases, and withdraw the needed amount without penalty when you reach your goal.
For a long-term goal, I think that a certificate of deposit (cd) is the best way to invest. Similar to a savings account, a cd allows you to place a certain amount of money away in order to receive a specific interest rate over a period of time. A cd also typically has higher interests rates compared to a savings account. However, if you reach your goal before the term you agreed to is up, you may have to pay a penalty, which will reduced your total