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What is Personal Finance?
Study of personal and family resources considered important in achieving financial success; it involves how people spend, save, protect, and invest their financial resources.
What is the difference between standard of living and level of living?
-Standard of living is what and individual or group desires & seeks to attain, to maintain, especially a standard of where you would like to be :)
-level of living where you actually are :(
What are the building blocks to Achieving Financial success?
1-Foundation: use of regular income to provide basic lifestyle and savings
2-Base: establishing a financial base using employee benefits and checking and savings accounts.
3- Establish: Setting financial goals
4- Manage: income taxes, housing expenses, transportation expenses and contingencies
5- Handle: credit cards, savings accts, education costs
6- Invest: Mutual funds and retirement plans, as well as stocks and bonds & real estate
7- Achieve! A financially successful Life
What is a business cycle?
-Business cycle (economic cycle): where the economy grows and contracts over time. Wavelike pattern of rising and falling economic activity where the same pattern occurs again and again over time.
What are a business cycle's phases?
1- expansion: when the economy is increasing
2- peak: then end of an expansion and the beginning of a contraction
3- contraction: when the economy is falling (may turn into a recession)
4- trough: the end of a contraction and beginning of an expansion
What is the Expansion stage?
It is the preferred stage of the economic cycle where production is at high capacity, retail sales are high, unemployment is low, and prices and interest rates are low or falling.
Under these conditions, consumers find it easier to buy homes, cars and expensive goods on credit and businesses are encourages to borrow to expand.
What is recession?
A recurring period of decline in total output, income, employment, and trade, usually lasting from six months to a year and marked by widespread contractions in many sectors of the economy.
What is deleveraging?
A time period when credit use shrinks in an economy instead of expanding as during normal economic times.
How do you tell the Future Direction of the Economy?
- 1-Look at Procyclic Indicators
- 2- Look at Countercyclic Indicators
- 3- Look at Leading Indicators
What is double-dip recession?
When the economy has a recession and then, soon after emerging from the recession with a short period of growth, quickly falls back into recession.
What is an economic indicator? And what does it help you do in terms of your personal financial decisions?
-Is any economic statistic such as the unemployment rate, GDP, or the inflation rate that suggests how well the economy is doing and how well it might be doing in the future.
-To make good financial decisions, you need to know where we are in the business cycle, how well the economy is doing and where the economy might be headed.
What is a procyclic (or procyclical) economic indicator?
One that moves in the same direction as the economy.