1. In what ways are personal and business financial activities similar?

Budgeting In a similar way as a company plans its financial activities, a budget is also an important personal financial planning tool. The budgeting process for both households and companies must start with setting goals. Your personal plan for spending will depend on what you want to achieve, such as saving for college or buying a car. A company also sets goals when creating a budget. These goals may include spending more for advertising, building a new factory, or increasing employee salaries.
Like your goals, these business goals will affect how a company spends its money.
Financial Statements When you keep track of your income and spending, you are creating an income statement. If you create a list of what you own (assets) and what you owe (liabilities), you have started developing a balance sheet. These two financial statements, the income statement and balance sheet, are vital financial planning tools for both individuals and companies. A company uses these financial reports to measure its progress. In a similar way, individuals and families can use an income statement and balance sheet to assess spending patterns and calculate the achievement of financial goals.