
Fill in the Blanks Personal financesOnline version Complete the text by VICTOR Mon 1 Personal finance is the process of and managing personal financial activities such as income , spending , saving , investing , and protection . The process of managing one ? s personal can be summarized in a budget or financial plan . The main areas of personal finance are income , spending , saving , investing , and protection . 2 1 . refers to a source of cash inflow that an individual receives and then uses to support themselves and their family . It is the starting point for our financial planning process . Salaries Bonuses Hourly wages Pensions Dividends These sources of all generate cash that an individual can use to either spend , save , or invest . In this sense , it can be thought of as the first step in our personal finance roadmap . 2 . includes all types of expenses an individual incurs related to buying goods and services or anything that is consumable ( i . e . , not an investment ) . All falls into two categories : cash ( paid for with cash on hand ) and credit ( paid for by borrowing money ) . The majority of most people ? s income is allocated here . Rent Mortgage payments Taxes Food Entertainment Travel Credit card payments The expenses listed above all reduce the amount of cash an individual has available for saving and investing . If expenses are greater than income , the individual has a deficit . Managing expenses is just as important as generating income , and typically people have more control over their discretionary expenses than their income . Good spending habits are critical for good personal finance management . 3 . refers to excess cash that is retained for future investing or spending . If there is a surplus between what a person earns as income and what they spend , the difference can be directed towards savings or investments . Physical cash Savings bank account Checking bank account Money market securities Most people keep at least some savings to manage their cash flow and the short - term difference between their income and expenses . Having too much savings , however , can actually be viewed as a bad thing since it earns little to no return compared to investments . 4 . relates to the purchase of assets that are expected to generate a rate of return , with the hope that over time the individual will receive back more money than they originally invested . It carries risk , and not all assets actually end up producing a positive rate of return . This is where we see the relationship between risk and return . Stocks Bonds Mutual funds Real estate Private companies Commodities Art It is the most complicated area of personal finance and is one of the areas where people get the most professional advice . There are vast differences in risk and reward between different investments , and most people seek help with this area of their financial plan . 5 . refers to a wide range of products used to guard against unforeseen and adverse events . Life insurance Health insurance Estate planning This is another area of personal finance where people typically seek professional advice and which can become quite complicated . 3 Good financial management comes down to having a solid plan and sticking to it . All of the above areas of personal finance can be wrapped into a budget or a formal financial plan . These plans are commonly prepared by personal bankers and investment advisors who work with their clients to understand their needs and goals and develop an appropriate course of action . Generally speaking , the main components of the financial planning process are : 4 1 . It ? s all for nothing if you don ? t know how much you bring home after taxes and withholding . So , before deciding anything , ensure you know exactly how much take - home pay you receive . 2 . A budget is essential to living within your means and saving enough to meet your long - term goals . The 50 / 30 / 20 rule is a budgeting method that offers a great framework . It breaks down like this : Fifty percent for living essentials . Thirty percent dining out and shopping for clothes . Twenty percent goes toward the future , such as paying down debt , saving for retirement , and emergencies . It ? s never been easier to manage money , thanks to a growing number of smartphone personal budgeting apps that put day - to - day finances in the palm of your hand . Examples : YNAB and PocketGuard . 3 . It ? s important to ensure money is set aside for unexpected expenses , such as medical bills , a significant car repair , day - to - day expenses if you get laid off , and more . The ideal safety net is three to 12 months of living expenses . Financial experts generally recommend putting away 20% of each paycheck every month . Once you ? ve filled up your emergency fund , don ? t stop . Continue funneling the monthly 20% toward other financial goals , such as a retirement fund or a down payment on a home . 4 . Most people have to borrow from time to time , and sometimes going into debt can be advantageous ? for example , if it leads to acquiring an asset . Taking out a mortgage to buy a house might be one such case . On the other hand , minimizing repayments ( to interest only , for instance ) can free up income to invest elsewhere or put into retirement savings while you ? re young . 5 . Credit cards can be major debt traps . However , it ? s unrealistic not to own one in the present world , as they have applications beyond buying things . They are crucial to establishing your credit rating and a great way to track spending , which can be a considerable budgeting aid . Credit needs to be managed correctly , meaning you should pay off your entire balance every month or keep your credit utilization ratio at a minimum ( that is , keep your account balances below 30% of your total available credit ) . Using a debit card , which takes money directly from your bank account , is another way to ensure that you will not be paying for accumulated small purchases over an extended period with interest . Avoid maxing out credit cards at all costs , and always pay bills on time . One of the fastest ways to ruin your credit score is to constantly pay bills late ? or worse , miss payments . 6 . Credit cards are the primary vehicle through which your credit score is built and maintained , so watching credit spending goes hand in hand with monitoring your credit score . If you ever want to obtain a lease , mortgage , or any other type of financing , then you ? ll need a solid credit report . There are a variety of credit scores available , but the most popular one is the FICO score . 7 . To protect the assets in your estate and ensure that your wishes are followed when you die , be sure you make a will and set up one or more trusts . You also should look into insurance and find ways to reduce your premiums , if possible : auto , home , life , disability , and long - term care ( LTC ) . Periodically review your policy to ensure it meets your family ? s needs through life ? s major milestones . Experts suggest that most people will need about 80% of their current salary in retirement . The younger you start , the more you benefit from what advisors call the magic of compounding interest ? how small amounts grow over time . Setting aside money now for your retirement not only allows it to grow over the long term but also can reduce your current income taxes if funds are placed in a tax - advantaged plan , such as an individual retirement account ( IRA ) . 8 . If something happens to you , life insurance helps your family cope and stay financially stable . 9 . Due to an overly complex tax code , many people leave hundreds or even thousands of dollars sitting on the table every year . By maximizing your tax savings , you ? ll free up money to reduce past debts , enjoy the present , and plan for the future . You should start saving receipts and tracking expenditures to take advantage of all possible tax deductions and credits . Many office supply stores sell helpful " tax organizers " that have the main categories already labeled . 10 . Budgeting and planning can seem full of deprivations . Make sure to reward yourself occasionally . Whether it ? s a vacation , a purchase , or an occasional night on the town , you need to enjoy the fruits of your labor . Doing so gives you a taste of the financial independence you ? re working so hard for . 5 The key to getting your finances on the right track is using skills you likely already have . Three key skills are finance prioritization , assessing the costs and benefits , and restraining your spending . : This means that you can look at your finances , discern what keeps the money flowing in , and make sure that you stay focused on those efforts . : This key skill keeps you from spreading yourself too thin . Ambitious individuals always have a list of ideas about other methods for hitting it big , whether it is a side business or an investment idea . While there is a place and time for taking a flyer , running your finances like a business means stepping back and honestly assessing the potential costs and benefits of any new venture . : This is the final big - picture skill of successful business management that must be applied to personal finances . Learning to restrain spending on non - wealth - building assets until after you ? ve met your monthly savings or debt reduction goals is crucial in building net worth .

Fill in the Blanks

Personal financesOnline version

Complete the text

by VICTOR Mon

Personal finance is the process of and managing personal financial activities such as income , spending , saving , investing , and protection . The process of managing one ? s personal can be summarized in a budget or financial plan .
The main areas of personal finance are income , spending , saving , investing , and protection .

1 .
refers to a source of cash inflow that an individual receives and then uses to support themselves and their family . It is the starting point for our financial planning process .

Salaries
Bonuses
Hourly wages
Pensions
Dividends
These sources of all generate cash that an individual can use to either spend , save , or invest . In this sense , it can be thought of as the first step in our personal finance roadmap .

2 .
includes all types of expenses an individual incurs related to buying goods and services or anything that is consumable ( i . e . , not an investment ) . All falls into two categories : cash ( paid for with cash on hand ) and credit ( paid for by borrowing money ) . The majority of most people ? s income is allocated here .

Rent
Mortgage payments
Taxes
Food
Entertainment
Travel
Credit card payments
The expenses listed above all reduce the amount of cash an individual has available for saving and investing . If expenses are greater than income , the individual has a deficit . Managing expenses is just as important as generating income , and typically people have more control over their discretionary expenses than their income . Good spending habits are critical for good personal finance management .

3 .
refers to excess cash that is retained for future investing or spending . If there is a surplus between what a person earns as income and what they spend , the difference can be directed towards savings or investments .

Physical cash
Savings bank account
Checking bank account
Money market securities
Most people keep at least some savings to manage their cash flow and the short - term difference between their income and expenses . Having too much savings , however , can actually be viewed as a bad thing since it earns little to no return compared to investments .

4 .
relates to the purchase of assets that are expected to generate a rate of return , with the hope that over time the individual will receive back more money than they originally invested . It carries risk , and not all assets actually end up producing a positive rate of return . This is where we see the relationship between risk and return .

Stocks
Bonds
Mutual funds
Real estate
Private companies
Commodities
Art
It is the most complicated area of personal finance and is one of the areas where people get the most professional advice . There are vast differences in risk and reward between different investments , and most people seek help with this area of their financial plan .

5 .
refers to a wide range of products used to guard against unforeseen and adverse events .

Life insurance
Health insurance
Estate planning
This is another area of personal finance where people typically seek professional advice and which can become quite complicated .

Good financial management comes down to having a solid plan and sticking to it . All of the above areas of personal finance can be wrapped into a budget or a formal financial plan .

These plans are commonly prepared by personal bankers and investment advisors who work with their clients to understand their needs and goals and develop an appropriate course of action .

Generally speaking , the main components of the financial planning process are :

1 .
It ? s all for nothing if you don ? t know how much you bring home after taxes and withholding . So , before deciding anything , ensure you know exactly how much take - home pay you receive .

2 .
A budget is essential to living within your means and saving enough to meet your long - term goals . The 50 / 30 / 20 rule is a budgeting method that offers a great framework . It breaks down like this :

Fifty percent for living essentials .
Thirty percent dining out and shopping for clothes .
Twenty percent goes toward the future , such as paying down debt , saving for retirement , and emergencies .
It ? s never been easier to manage money , thanks to a growing number of smartphone personal budgeting apps that put day - to - day finances in the palm of your hand . Examples : YNAB and
PocketGuard .

3 .
It ? s important to ensure money is set aside for unexpected expenses , such as medical bills , a significant car repair , day - to - day expenses if you get laid off , and more . The ideal safety net is three to 12 months of living expenses .

Financial experts generally recommend putting away 20% of each paycheck every month . Once you ? ve filled up your emergency fund , don ? t stop . Continue funneling the monthly 20% toward other financial goals , such as a retirement fund or a down payment on a home .

4 .
Most people have to borrow from time to time , and sometimes going into debt can be advantageous ? for example , if it leads to acquiring an asset . Taking out a mortgage to buy a house might be one such case . On the other hand , minimizing repayments ( to interest only , for instance ) can free up income to invest elsewhere or put into retirement savings while you ? re young .

5 .
Credit cards can be major debt traps . However , it ? s unrealistic not to own one in the present world , as they have applications beyond buying things . They are crucial to establishing your credit rating and a great way to track spending , which can be a considerable budgeting aid .

Credit needs to be managed correctly , meaning you should pay off your entire balance every month or keep your credit utilization ratio at a minimum ( that is , keep your account balances below 30% of your total available credit ) . Using a debit card , which takes money directly from your bank account , is another way to ensure that you will not be paying for accumulated small purchases over an extended period with interest . Avoid maxing out credit cards at all costs , and always pay bills on time . One of the fastest ways to ruin your credit score is to constantly pay bills late ? or worse , miss payments .

6 .
Credit cards are the primary vehicle through which your credit score is built and maintained , so watching credit spending goes hand in hand with monitoring your credit score . If you ever want to obtain a lease , mortgage , or any other type of financing , then you ? ll need a solid credit report . There are a variety of credit scores available , but the most popular one is the FICO score .

7 .
To protect the assets in your estate and ensure that your wishes are followed when you die , be sure you make a will and set up one or more trusts . You also should look into insurance and find ways to reduce your premiums , if possible : auto , home , life , disability , and long - term care ( LTC ) . Periodically review your policy to ensure it meets your family ? s needs through life ? s major milestones . Experts suggest that most people will need about 80% of their current salary in retirement . The younger you start , the more you benefit from what advisors call the magic of compounding interest ? how small amounts grow over time . Setting aside money now for your retirement not only allows it to grow over the long term but also can reduce your current income taxes if funds are placed in a tax - advantaged plan , such as an individual retirement account ( IRA ) .

8 .
If something happens to you , life insurance helps your family cope and stay financially stable .

9 .
Due to an overly complex tax code , many people leave hundreds or even thousands of dollars sitting on the table every year . By maximizing your tax savings , you ? ll free up money to reduce past debts , enjoy the present , and plan for the future . You should start saving receipts and tracking expenditures to take advantage of all possible tax deductions and credits . Many office supply stores sell helpful " tax organizers " that have the main categories already labeled .

10 .
Budgeting and planning can seem full of deprivations . Make sure to reward yourself occasionally . Whether it ? s a vacation , a purchase , or an occasional night on the town , you need to enjoy the fruits of your labor . Doing so gives you a taste of the financial independence you ? re working so hard for .

The key to getting your finances on the right track is using skills you likely already have . Three key skills are finance prioritization , assessing the costs and benefits , and restraining your spending .

: This means that you can look at your finances , discern what keeps the money flowing in , and make sure that you stay focused on those efforts .

: This key skill keeps you from spreading yourself too thin . Ambitious individuals always have a list of ideas about other methods for hitting it big , whether it is a side business or an investment idea . While there is a place and time for taking a flyer , running your finances like a business means stepping back and honestly assessing the potential costs and benefits of any new venture .

: This is the final big - picture skill of successful business management that must be applied to personal finances . Learning to restrain spending on non - wealth - building assets until after you ? ve met your monthly savings or debt reduction goals is crucial in building net worth .

You can integrate the game into an LMS compatible with LTI 1.1 or LTI 1.3 such as Canvas, Moodle, or Blackboard. This way, the scores will be automatically saved into the platform’s gradebook.

Personal finances