Chapter 4 Discussion/Participation

Kishon

uum08_ppt_accessible_ch04a.pptx

Home >Education homework help >Chapter 4 Discussion/Participation

Using & Understanding Mathematics: A Quantitative Reasoning Approach

Eighth Edition

Chapter 4

Managing Money

Slide - ‹#›

If this PowerPoint presentation contains mathematical equations, you may need to check that your computer has the following installed:

1) MathType Plugin

2) Math Player (free versions available)

3) NVDA Reader (free versions available)

Unit 4 A Taking Control of Your Finances

Controlling Your Finances

Know your bank balance. Avoid bouncing a check or have a debit card rejected.

Know what you spend. In particular, keep track of debit and credit card spending.

Don’t buy on impulse. Think first; buy only if the purchase makes sense.

Make a budget, and don’t overspend it.

Example 1: Credit Card Spending (1 of 2)

Cassidy has begun keeping her spending under better control, but she still can’t fully pay off her credit card balance. She maintains an average monthly balance of about $1100, and her card charges a 24% annual interest rate, which it bills at a rate of 2% per month. How much is she spending on credit card interest?

Solution

Her average monthly interest is 2% of the $1100 average balance.

Example 1: Credit Card Spending (2 of 2)

Multiply by 12 months in a year gives her annual interest payment.

Interest alone is costing Cassidy more than $260 per year – a significant amount for someone living on a tight budget. Clearly, she’d be a lot better off if she could find a way to pay off that credit card balance quickly and end those interest payments.

A Four-Step Budget-Making Process

List all monthly income. Be sure to include an average monthly amount for any income you do not receive monthly (such as once-a-year payments).

Determine your average monthly expenses. Be sure to include an average amount for expenses that don’t recur monthly, such as expenses for tuition, books, vacations, insurance, and holiday gifts.

Determine your net monthly cash flow by subtracting your total expenses from your total income.

Make adjustments as needed.

Example 2: College Expenses (1 of 2)

In addition to your monthly expenses, you have the following college expenses that you pay twice a year: $3500 for tuition each semester, $750 in student fees each semester, and $800 for textbooks each semester. How should you handle these expenses in computing your monthly budget?

Solution

Amount paid over a whole year:

Example 2: College Expenses (2 of 2)

To average this total expense for the year on a monthly basis, we divide by 12.

Your average monthly college expense for tuition, fees, and textbooks comes to a little less than $850, so you should put $850 per month into your expense list.

<div