Personal FinanceUnit 1INCOME “Most people don’t plan to fail. They simply fail to plan.”
What is financial planning? • More than budgeting • More than investing • Financial planning is a thinking process that help achieve goals.
How do you build a house? • Floor plan • Gather resources • Consider options • Take action
Questions You Will Answer: • What are the five steps in the personal financial process? • How do you set “SMART” goals? • How do your choices affect your money? • How can money help you live a satisfying life?
Quotes to Consider “Most people don’t plan to fail. They simply fail to plan.” “If you don’t know where you are going, any road will take you there.”
Can You Believe… • Only ___% of teenagers have ever made a written plan for their money. • In a national survey, ___% of teenagers thought earnings from a savings account might not be taxed.
Can You Believe… • ___% of teenagers surveyed thought you had no responsibility at all to repay fraudulent charges on a credit card. • ___% of teenagers surveyed said they put some money in savings when they receive an allowance or earn some money.
Can You Believe… • ___% of teenagers are likely to go to their parents for financial information. • ___% of teenagers consider themselves to be spenders rather than savers.
STEP 1 Set Goals
NEEDS vs WANTS • NEEDS • Essentials…the basics of life • Food • Clothing • Shelter
NEEDS vs WANTS • WANTS • Simply increase the quality of living
Family Friends Teachers Church Work The beliefs and practices in your life that are very important to you. Values
Assignment 1.2 My Values Page 5
S.M.A.R.T. GOALS Specific Measurable Attainable Realistic Time-bound
SMART Goals Timelines • Short Term • Up to three months • Intermediate Term • Three months to one year • Long Term • Longer than one year • DELAYED GRATIFICATION
Assignment 1.3My SMART GoalsPage 7 Save $25 so I can take my friend out for pizza. 1st of next month Short term $25.00 $7.50 $25.00 $7.50
Step 2 Analyze Information
Cash Flow • A measure of the money you receive and the money you spend.
Step 3 Create A Plan
Decision Making • The process of considering and analyzing information in order to make a decision.
Opportunity Cost • Choosing one option may mean giving up altogether another goal. • It’s a tradeoff!
Step 4 Implement the Plan
Three Rs of Money • Reality • Responsibility • Restraint
Step 5 Monitor and Modify the Plan
Monitor and Modify • Are your existing goals still worth doing? • Is there a new goal to add to your list? • Is there an existing goal you want to drop or change?
ACTION STEPS • Page 14 • Write down two BIG GOALS • Write the first and second step for each goal
Questions To Answer: • What are the five steps in the personal financial process? • How do you set “SMART” goals? • How do your choices affect your money? • How can money help you live a satisfying life?
2001 National Endowment for Financial Education, Greenwood Village, Colorado, 80111