Disclaimer: The views expressed are those of the presenters and do not necessarily
In this content, you will explore concepts like assets, liabilities, net worth, and financial management tips. Discover how to analyze balance sheets, differentiate between assets and liabilities, and use credit wisely to build wealth effectively.
Uploaded on Feb 26, 2025 | 0 Views
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Disclaimer: The views expressed are those of the presenters and do not necessarily reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System.
True or False? Most millionaires inherited their wealth. Most millionaires earn more than $500,000 per year. College graduates earn about twice what high school graduates earn over a 40-year work life. People who are self-employed rarely become millionaires. All millionaires wear expensive clothes. Millionaires usually drive new cars. Many millionaires drop out of college to start work. It is impossible to save enough to be a millionaire.
Assets Anything an individual or business owns that has commercial or exchange value Liabilities Money an individual or organization owes; same as debt Net Worth The difference between the total assets and total liabilities of an individual
Sandras Balance Sheet Description Amount Owed to her mother for extra cell phone charges $250 Present value of a savings bond that her uncle gave her $150 Balance on a car loan $1,500 Savings account from summer job $750 DVD collection $200 1999 car $3,500 Balance due on prom dress $200
Sandras Balance Sheet Assets Liabilities Present value of a savings bond that her uncle gave her Savings account from summer job DVD collection $150Owed to her mother for extra cell phone charges $250 $750 Balance on a car loan $1500 $200 Balance due on prom dress $200 1999 car $3500 Total assets $4600 Sandra s net worth = $2650 Total liabilities $1950
Using Credit Wisely Think about your balance sheet Debt increases your liabilities does it increase your assets? Think about your budget How will the payments affect your budget? What other spending will you sacrifice to pay off the debt?
Goals You might have a goal to simply increase your net worth, but most people have a more specific goal in mind. Once you set a goal, you have to evaluate the saving and the income required to achieve the goal.
Goals Buy a new car Go to college Buy a used car Go to the senior prom Rent an apartment Take a trip Buy a house Buy a new HDTV
Sams Two-Week Budget Spending Categories Eating out at lunch Movie night with friends Dinner with friends Football game and snacks New CD New item of clothing Gas Soft drink from vending machine Total Expenses Expenses Changes New 60 40 20 10 20 50 70 10 $280
Sams Two-Week Budget Spending Categories Eating out at lunch Expenses 60 Changes Take his lunch Every other week Eat out once New 24 Movie night with friends 40 20 Dinner with friends Football game and snacks 20 10 10 10 Music downloads 20 Reduce 10 New item of clothing Gas Soft drink from vending machine Total Expenses 50 70 10 Only one 25 70 1 Only one $280 $170
Save and Invest Build a strong financial foundation first. How much risk are you willing to take? Think about your time horizon and other factors. The sooner you start, the better (and easier)!
Applying for Credit Read the fine print! Look for: Finance charges the dollar amount you pay to use credit Annual percentage rate (APR) the percentage cost of credit on a yearly basis Fees can include loan fees, annual fees, late- payment fees, etc.
Credit Reports Credit reporting company Credit report Credit score
Reviewing Your Credit Report Three major credit reporting companies Equifax Experian Trans Union One website for free credit reports www.annualcreditreport.com
Identity Theft It's not too early to pull your credit report! Carefully review the report and correct any inaccuracies. Don't carry your Social Security card in your wallet! Shred any papers that contain personal information before throwing them away.
