How Can Peer Pressure Affect Your Cash Outflows

Question: What two personal financial statements are most important to personal financial planning?

Answer: Personal balance statement and personal cash flow statement

Question: Define cash inflows and cash out-flows and identify some sources of each

Answer: cash inflows:

-income

-e.g. salary, stock, and deposits in saving accounts as the form of interest income

cash out-flows:

-all expenses as a result of your spending decisions

-e.g. monthly rent or dry cleaning costs

Question: How are net cash flows determined?

Answer: net cash flows= cash inflows-cash outflow

Question: Jeremey wants to increase his net worth. What advice would you give him?

Answer: Have less you owe and earn more money to put it simply. More specifically you want to pursue profitable careers and make smart money-spending decisions. To owe less you should get into less debt.

Question: How can peer pressure affect your cash outflows?

Answer: Friends can encourage you to buy things with them that you do not have the money to buy, and thus can greatly increase your cash outflow.

Question: What is FDIC?

Answer: FDIC is the Federal Deposit Insurance Corporation which is a government-owned insurance agency that insures the safety of bank deposits.

Question: Why is FDIC insurance important?

Answer: FDIC is important because it protects the depositors from if the banks were to have issues, the impact of the crisis would be less with FDIC.

Question: How does student loan debt affect your cash flows while in college?

Answer: Student loan debt makes your cash flow negative in college, as well as not being able to get a good cash inflow without a full-time job

Question: How does student loan debt affect your cash flows after college?

Answer: As you leave college cash flows tend to increase as you pay off student debt and earn more money

Question: How are cash flows related to your life stage or age?

Answer: Cash flows are very low when you are young or in college. Then they increase significantly throughout adulthood as you become more experienced at your job. Finally, in retirement, your cash flows are smaller than when you were working.