Money management review

Money ManagementPractice Reading Review

Money ManagementEvery product or service you purchase each day requires sufficient funds to cover these

expenses. Expenses can range from your morning cup of coffee to major car repairs. You need to have

liquidity, or access to funds to cover any short-term cash needs. You can enhance your liquidity by using

money management and credit management.

Money management involves decisions regarding how much money to retain in a liquid form

and how to allocate the funds among short-term investments. If you do not have access to money to

cover cash needs, you may have insufficient liquidity. That is, you have the assets to cover your

expenses, but the money is not easily accessible. Finding an effective liquidity level involves deciding

how to invest your money so that you can earn a return, but also have easy access cash if needed. At

times, you may be unable to avoid cash shortages because of unanticipated expenses.

Credit management involves decisions about how much credit you need to support your

spending and which sources of credit to use. Credit is commonly used to cover both large and small

expenses when you are short on cash, so it enhances your liquidity. Credit should be used only when

necessary, however, as you will need to pay back borrowed funds with interest (and the interest

expenses may be very high).

Loans are typically needed to finance large expenditures, such as the payment of college

tuition or the purchase of a car or a home. The amount of financing needed is the difference between

the amount of the purchase and the amount of money you have available. Managing loans involves three

decisions. The first is to determine how much you can afford to borrow. The other two decisions are

deciding on the maturity (length of time) of the loan, and selecting a loan that charges a competitive

interest rate. (adapted from Madura, Jeff. Personal Finance, red. 5-6)

Money ManagementEvery product or service you purchase each day requires sufficient funds to cover these

expenses. Expenses can range from your morning cup of coffee to major car repairs. You need to have

liquidity, or access to funds to cover any short-term cash needs. You can enhance your liquidity by using

money management and credit management.

Money management involves decisions regarding how much money to retain in a liquid form

and how to allocate the funds among short-term investments. If you do not have access to money to

cover cash needs, you may have insufficient liquidity. That is, you have the assets to cover your

expenses, but the money is not easily accessible. Finding an effective liquidity level involves deciding

how to invest your money so that you can earn a return, but also have easy access cash if needed. At

times, you may be unable to avoid cash shortages because of unanticipated expenses.

Credit management involves decisions about how much credit you need to support your

spending and which sources of credit to use. Credit is commonly used to cover both large and small

expenses when you are short on cash, so it enhances your liquidity. Credit should be used only when

necessary, however, as you will need to pay back borrowed funds with interest (and the interest

expenses may be very high).

Loans are typically needed to finance large expenditures, such as the payment of college

tuition or the purchase of a car or a home. The amount of financing needed is the difference between

the amount of the purchase and the amount of money you have available. Managing loans involves three

decisions. The first is to determine how much you can afford to borrow. The other two decisions are

deciding on the maturity (length of time) of the loan, and selecting a loan that charges a competitive

interest rate. (adapted from Madura, Jeff. Personal Finance, red. 5-6)

So…what do we do?

One sentence summaries of

each paragraph

Paragraph 1

Every product or service you purchase

each day requires sufficient funds to cover

these expenses. Expenses can range from

your morning cup of coffee to major car

repairs. You need to have liquidity, or access

to funds to cover any short-term cash needs.

You can enhance your liquidity by using

money management and credit management.

Paragraph 1

Every product or service you purchase each

day requires sufficient funds to cover these

expenses. Expenses can range from your morning

cup of coffee to major car repairs. You need to

have liquidity, or access to funds to cover any

short-term cash needs. (You can enhance your

liquidity by using money management and credit

management.) this seems like a main idea/central point

We need liquid funds to cover our expenses and liquidity comes

from careful money and credit management.

definitiondefinition

Paragraph 2

Money management involves decisions regarding how much money to retain in a liquid form and how to allocate the funds among short-term investments. If you do not have access to money to cover cash needs, you may have insufficient liquidity. That is, you have the assets to cover your expenses, but the money is not easily accessible. Finding an effective liquidity level involves deciding how to invest your money so that you can earn a return, but also have easy access cash if needed. At times, you may be unable to avoid cash shortages because of unanticipated expenses.

Paragraph 2

Money management involves decisions regarding how much money to retain in a liquid form and how to allocate the funds among short-term investments. If you do not have access to money to cover cash needs, you may have insufficient liquidity. That is, you have the assets to cover your expenses, but the money is not easily accessible. Finding an effective liquidity level involves deciding how to invest your money so that you can earn a return, but also have easy access cash if needed. At times, you may be unable to avoid cash shortages because of unanticipated expenses.

Maintaining liquidity through money management

Paragraph 3

Credit management involves decisions about how much credit you need to support your spending and which sources of credit to use. Credit is commonly used to cover both large and small expenses when you are short on cash, so it enhances your liquidity. Credit should be used only when necessary, however, as you will need to pay back borrowed funds with interest (and the interest expenses may be very high).

Paragraph 3

Credit management involves decisions about how much credit you need to support your spending and which sources of credit to use. Credit is commonly used to cover both large and small expenses when you are short on cash, so it enhances your liquidity. Credit should be used only when necessary, however, as you will need to pay back borrowed funds with interest (and the interest expenses may be very high).

Credit management to maintain liquidity

Paragraph 4

Loans are typically needed to finance large

expenditures, such as the payment of college tuition

or the purchase of a car or a home. The amount of

financing needed is the difference between the

amount of the purchase and the amount of money

you have available. Managing loans involves three

decisions. The first is to determine how much you

can afford to borrow. The other two decisions are

deciding on the maturity (length of time) of the

loan, and selecting a loan that charges a competitive

interest rate.

Paragraph 4

Loans are typically needed to finance large expenditures, such as the payment of college tuition or the purchase of a car or a home. The amount of financing needed is the difference between the amount of the purchase and the amount of money you have available. Managing loans involves three decisions. The first is to determine how much you can afford to borrow. The other two decisions are deciding on the maturity (length of time) of the loan, and selecting a loan that charges a competitive interest rate.

Loans can increase liquidity and managing these loans involves three decisions.

Which sentence best states the

main idea of the passage?

A. Managing credit will depend upon spending habits

and sources of available

B. Money management involves decisions about the

liquidity of one's assets

C. Financing is often needed to pay for large

expenditures.

D. Liquidity of money can be improved through

money management and credit management.

Paragraph Summaries

1. We need liquid funds to cover our expenses and

liquidity comes from careful money and credit

management.

2. Maintaining liquidity through money management

3. Credit management to maintain liquidity

4. Loans can increase liquidity and managing these

loans involves three decisions.

Which sentence best states the

main idea of the passage?

A. Managing credit will depend upon spending habits

and sources of available

B. Money management involves decisions about the

liquidity of one's assets

C. Financing is often needed to pay for large

expenditures.

D. Liquidity of money can be improved through

money management and credit management.

The author's primary purpose is

to

A. discuss the dangers of not following a budget.

B. list the various decisions and issues for

managing liquidity.

C. explain the types of loans that are available.

D. describe the best way to invest extra money.

MI: Liquidity of money can be improved through

money management and credit management.

The author's primary purpose is

to

A. discuss the dangers of not following a budget.

B. list the various decisions and issues for

managing liquidity.

C. explain the types of loans that are available.

D. describe the best way to invest extra money.

MI: Liquidity of money can be improved through

money management and credit management.

"Credit should be used only

when necessary.”

This part of the sentence from paragraph

three is a statement of

A. fact

B. opinion

"Credit should be used only

when necessary.”

This part of the sentence from paragraph

three is a statement of

A. fact

B. opinion

The reader can infer from this

article that

A. Most people are poor managers of money.

B. Buying a house is an example of a short-term cash

need.

C. Most people should hire a financial consultant to

help them become better managers of their

money because the issues involved are very

complicated.

D. Surplus money is best invested in order to

grow, but everyone should plan for unanticipated

expenses and have available liquid assets to

handle them.

The reader can infer from this

article that

A. Most people are poor managers of money.

The author does not lead us to this inference with

any statements or judgements concerning how well

people manage their money. The passage is

concerned with information on how to manage

liquidity.

The reader can infer from this

article that

B. Buying a house is an example of a short-term cash

need.

Paragraph one states, “You need to have

liquidity, or access to funds to cover any short-term

cash needs.”

Paragraph four states, “Loans are typically needed

to finance large expenditures, such as the payment

of college tuition or the purchase of a car or a

home.”

A house is not a small purchase or a short term

cash need. One would not pay cash for a home.

The reader can infer from this

article that

C. Most people should hire a financial consultant to

help them become better managers of their

money because the issues involved are very

complicated.

There is no reference to hiring a financial

consultant nor to the issues being very complicated

The reader can infer from this

article that

D. Surplus money is best invested in order to

grow, but everyone should plan for unanticipated

expenses and have available liquid assets to handle

them.

Paragraph 2 states, “Finding an effective liquidity

level involves deciding how to invest your money so

that you can earn a return, but also have easy access

cash if needed.” This indicates investing money for

growth (interest) is best but that we should maintain

liquid assets for expenses.

The reader can infer from this

article that

A. Most people are poor managers of money.

B. Buying a house is an example of a short-term cash need.

C. Most people should hire a financial consultant to help them become better managers of their money because the issues involved are very complicated.

D. Surplus money is best invested in order to grow, but everyone should plan for unanticipated expenses and have available liquid assets to handle them.

Liquidity, as first mentioned in

line 3, most nearly means

A. money available for spending

B. amount of a loan

C. amount of large expenditures

D. one's credit rating

Liquidity, as first mentioned in

line 3, most nearly means

“You need to have liquidity, or access to

funds to cover any short-term cash needs.”

A. money available for spending

B. amount of a loan

C. amount of large expenditures

D. one's credit rating

Throughout the

passage, overall, which type of

support is offered to describe the

various issues involved in

managing money or credit?

A. Emotional

B. Objective

Throughout the

passage, overall, which type of

support is offered to describe the

various issues involved in

managing money or credit?

A. Emotional

B. Objective

Identify the relationship among these

sentences from paragraph four.

"Managing loans involves three decisions. The first

is to determine how much you can afford to

borrow. The other two decisions are deciding on

the maturity (length of time) of the loan, and

selecting a loan that charges a competitive interest

rate.

A. definition and example

B. comparison/contrast

C. listing

D. cause and effect

Identify the relationship among these

sentences from paragraph four.

"Managing loans involves three decisions. The first

is to determine how much you can afford to

borrow. The other two decisions are deciding on

the maturity (length of time) of the loan, and

selecting a loan that charges a competitive interest

rate.

A. definition and example

B. comparison/contrast

C. listing

D. cause and effect

As used in line 10, the phrase

"money is not easily accessible"

meansA. the purchaser does not have the money now, but

has the means to earn it.

B. the purchaser has money, but it is being used for

investments.

C. the purchaser cannot get to the bank quickly or

easily.

D. the purchaser does not have the money to buy an

item.

Look back in the paragraph…

“If you do not have access to money to cover cash

needs, you may have insufficient liquidity. That

is, you have the assets to cover your expenses, but

the money is not easily accessible.”

This means you do not have cash

or liquid funds

As used in line 10, the phrase

"money is not easily accessible"

meansA. the purchaser does not have the money now, but

has the means to earn it.

B. the purchaser has money, but it is being used for

investments.

C. the purchaser cannot get to the bank quickly or

easily.

D. the purchaser does not have the money to buy an

item.

Identify the relationship of the

parts within the following

sentence:

"At times you may be unable to avoid cash

shortages because of unanticipated expenses.”

A. Cause and effect

B. Classification

C. Comparison

D. Addition

So, what about my trick?

Uh oh! No punctuation mark to separate

the sentence parts!!

Where is the transition?

"At times you may be unable to avoid cash

shortages because of unanticipated

expenses.”

Because of = cause and effect

Identify the relationship of the

parts within the following

sentence:

"At times you may be unable to avoid cash

shortages because of unanticipated expenses.”

A. Cause and effect

B. Classification

C. Comparison

D. Addition

One reasonable conclusion that

can be drawn from the last

paragraph is

A. Wise money managers borrow as much money as

possible in order to have more liquidity.

B. Everyone will need a loan to finance a house or a

college education.

C. People who need a loan are able to borrow as

much as they need, as long as they pay it back.

D. Loan rates will vary depending upon the loan

amount, maturity length, and the loan company.

A. Wise money managers borrow as much

money as possible in order to have more

liquidity.

Loans are typically needed to finance large

expenditures, such as the payment of college tuition

or the purchase of a car or a home. The amount of

financing needed is the difference between the

amount of the purchase and the amount of money

you have available. Managing loans involves three

decisions. The first is to determine how much you

can afford to borrow. The other two decisions are

deciding on the maturity (length of time) of the

loan, and selecting a loan that charges a competitive

interest rate.

B. Everyone will need a loan to finance

a house or a college education.

Loans are typically needed to finance large

expenditures, such as the payment of college tuition

or the purchase of a car or a home. The amount of

financing needed is the difference between the

amount of the purchase and the amount of money

you have available. Managing loans involves three

decisions. The first is to determine how much you

can afford to borrow. The other two decisions are

deciding on the maturity (length of time) of the

loan, and selecting a loan that charges a competitive

interest rate.

C. People who need a loan are able to borrow

as much as they need, as long as they pay it

back.

Loans are typically needed to finance large expenditures, such as the payment of college tuition or the purchase of a car or a home. The amount of financing needed is the difference between the amount of the purchase and the amount of money you have available. Managing loans involves three decisions. The first is to determine how much you can afford to borrow. The other two decisions are deciding on the maturity (length of time) of the loan, and selecting a loan that charges a competitive interest rate.

We really aren’t given any information about how much they are able to borrow only how to figure out how much is needed.

D. Loan rates will vary depending upon

the loan amount, maturity length, and

the loan company.

Loans are typically needed to finance large expenditures, such as the payment of college tuition or the purchase of a car or a home. The amount of financing needed is the difference between the amount of the purchase and the amount of money you have available. Managing loans involves three decisions. The first is to determine how much you can afford to borrow. The other two decisions are deciding on the maturity (length of time) of the loan, and selecting a loan that charges a competitive interest rate.

One reasonable conclusion that

can be drawn from the last

paragraph is

A. Wise money managers borrow as much money as

possible in order to have more liquidity.

B. Everyone will need a loan to finance a house or a

college education.

C. People who need a loan are able to borrow as

much as they need, as long as they pay it back.

D. Loan rates will vary depending upon the loan

amount, maturity length, and the loan company.

What is the overall tone of this

passage?

A. reflective

B. neutral

C. persuasive

D. informative

What is the overall tone of this

passage?

A. reflective

B. neutral

C. persuasive

D. informative