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ReconcilingYour MoneyAccountsEver wondered whether theinformation in Moneymatches that on your state-ments? You should, becausereconciling the numbers inMoney with those on yourbank statements is vital toyour financial well-being.
Upon starting Money for the first time, you will beguided through a series of steps to perform twomain tasks: The same was true in France, Finland, Germany, Greece, and seven other European countries. On that day, 12 countries all officially gave up their own currencies and instead adopted a common currency—the euro. Admittedly, the transition was not quite as stark as in our story: there was a period of about 2 months in which euros and the old local currencies both circulated. But the essence is the same. At one time, euro notes were just colored pieces of paper that shopkeepers would not accept for transactions. Then, not that long afterward, those colored pieces of paper became valuable, while the old currencies turned into worthless pieces of paper. A wizard will be displayedwith a series of questions.Continue to work througheach step answeringquestions about yourcredit card. The Account Register is one of the places within Moneywhere you will be spending time entering details ofincome and expenditure (called transactions). Becausethe Account Register has some very powerful features, tryreading the following to learn how you can take care ofyour finances more effectively. Cleared Column In the Cleared Column, ‘C’ in theAccount Register, you will see an ‘E’for items added or matched totransactions on an Online Statement.These will change to an ‘R’(for Reconciled) when you balanceyour account.To understand the role that money plays in an economy, begin by imagining a world where we must search for the goods and services that we want to buy and there is no money, so all trades take place through barter. Imagine, for example, that you are a web designer, and you want to buy a used car. You must look around for someone who has a car for sale. This search takes time: it has an opportunity cost in that you would prefer to spend that time working or enjoying leisure. Eventually, you find someone who has a car that you are interested in buying. But your problems are not over. He has a car for sale, but what can you give him in exchange? You have to hope that he is interested in obtaining some web design services in exchange for the car. Successful barter requires a coincidence of wants: you must have what the other person wants, and they must have what you want. EsEsEsEsEstimate Plan Vtimate Plan Vtimate Plan Vtimate Plan Vtimate Plan Value:alue:alue:alue:alue: Use this to produce a graph,showing an estimate of how much one of your savingsplans is likely to be worth on a specific date in thefuture, so you can see whether it will cover the cost ofa planned event for example.
and there is no longer any possibility of arbitrage. This is another illustration of the law of one price. If we were literally talking just about arbitrage in blue jeans, most of the adjustment would take place in the markets for blue jeans in the United States and Europe, and there would be a negligible effect on the exchange rate. But if the same kinds of arbitrage opportunities exist for lots of goods, then there will be an impact on the exchange rate as well. The Risk FactorThink carefully about the risk factor before choosingyour investment options. At one end of the scale, there isless risk to be taken when placing your money in depositaccounts offered by banks and building societies(Savings). At the other end, you can gamble a lot ofmoney on high risk ventures which offer nosafety net. Or, if you prefer, perhaps choose another categorygroup you feel is more appropriate to the way you use theInternet (such as ‘Computer Expenses’).A currency is undervalued if, following this equation, its price is too low compared to the ratio of price levels in the two countries. A currency is overvalued if, following this equation, its price is too high compared to the ratio of price levels in the two countries. As in our discussion of the euro, if a currency is overvalued, then we would expect its value to decrease over time. This is called a depreciation A decrease in the price of a currency. of the currency. Likewise, we would expect the price of an undervalued currency to increase over time. This is called an appreciation An increase in the price of a currency. of the currency. If countries want to have a permanently fixed exchange rate, there is an option that is more radical than a currency board. Countries can decide to adopt a common currency, like the European countries that adopted the euro. There are several reasons why countries might decide to take such a course of action. The first advantage of a common currency is that it enhances the role of money as a medium of exchange. There is no longer a need to exchange one currency for another, making it easier to trade goods and services across countries. People do not have to deal with the inconveniences of exchanging currencies: individuals do not have to exchange cash at airports, and firms do not need to manage multiple currencies to conduct international business. In the jargon of economics, a single currency removes transaction costs. These costs might be individually small, but they can add up when you consider just how many times households and firms needed to switch from one of the euro area currencies to another. According to studies supporting a common currency, these gains from reduced transactions costs were substantial. One of the key analyses was the Delors report. A summary of that report is available at “Phase 3: the Delors Report,” European Commission, October 30, 2010, accessed August 22, 2011, http://ec.europa.eu/economy_finance/euro/emu/road/delors_report_en.htm. A complete report on the history of the euro is available at “One Currency for One Europe: The Road to the Euro,” European Commission, 2007, accessed August 22, 2011, http://ec.europa.eu/economy_finance/publications/publication6730_en.pdf. Government bonds. A government bond is also a loan contract; if you buy a government bond, you are extending credit to the government. The bond is a promise to pay a certain amount at some future date. Because the loan will be paid off a number of years in the future, it is slightly more complicated to calculate the interest rate. Create a realistic budget. It’s easy to create areasonable budget when you can see exactly whereyour money is going. And comparing your actualfigures to the budgeted ones will let you knowprecisely how you’re doing. Suppose we think about this equation applying (approximately) to all goods and services. We can then get a better prediction of the exchange rate by looking at a general price index in each country: price of dollar in euros = price of bundle of goods in Europe price of same bundle of goods in the United States .
Notice that we have referred to next year’s interest factor as “ex Making aWill withMoney’sHelpA Will is the legal documentin which you state how youwould like your assets to bedistributed when you die. Ifyou die intestate, (without alegal Will) your estate isdivided according to Englishlaw between family membersand any other people whomight have a valid claim toyour estate. This can havefinancial implications foryour loved ones. Even if youalready have a Will, you canuse the Will MakerWorksheet as a remindertool for updating your Will;as practice for re-draftingyour Will; or to help youunderstand more aboutyour Will. Split Deposits. If you haveseveral items to deposit thatwill clear at different times,use one deposit slip for eachtype of deposit to makereconciling (balancing) theaccount easier when you getyour bank statement. Of course, we do not often observe these switches across colors of paper within an economy. People get used to one type of currency, and it is difficult to change everyone’s behavior at once. Still, Europe did, in effect, switch from green pieces of paper to purple pieces of paper. Sure enough, no one in Europe these days is willing to accept French francs, Portuguese escudos, or Finnish marks. These are the old pieces of paper. Now people will accept only the new pieces of paper. After starting Money for the first time, enter detailsfor one or two of your main banks and perhaps oneor two credit card accounts.
LifLifLifLifLife assure assure assure assure assurance:ance:ance:ance:ance: If you have dependants (such aschildren or a partner who does not have an income),life assurance can provide some financial protectionin the case of your death. INTERNET UPDATESSubjectSubjectSubjectSubjectSubject DescrDescrDescrDescrDescriptioniptioniptioniptioniption Most exchanges of dollars for euros do not actually entail someone traveling to Europe. Think about the foreign currency needs of a large multinational firm that produces goods and services in Europe but sells its output in the United States. The company naturally needs euros to pay workers and suppliers in Europe. Since it sells goods and thus earns revenues in dollars, the company must convert from dollars to euros very frequently. But you will not see the company’s chief financial officer in an airport line to exchange money. Instead, such currency operations are conducted through financial institutions, such as commercial banks. Choose a SaChoose a SaChoose a SaChoose a SaChoose a Savings Plan:vings Plan:vings Plan:vings Plan:vings Plan: Just what you need whenlooking to set up a plan, information about thedifferent types so you can choose which one is best foryou. This option is based on information that youenter about your circumstances, how much you wantto save and how long for. AAAAAccounts:ccounts:ccounts:ccounts:ccounts: Creating an investment account is the firststep in entering your investments into Money. Youcan then add your individual investments to it.Generally, you'll create one investment account foreach brokerage statement you receive. One suchaccount may contain several investments.
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