Unit 1 - Your Financial Plan: Where It All Begins

“DO Now: What does this quote mean? Most people don’t plan to fail… They simply fail to plan!” https://www.youtube.com/watch?v=56gargTfasA 1-A

What do you think? True or False Teens get most of their money from part time jobs False - Teens get most of their money from parents (62% parents, 25% part time job, 36% gifts, 21% allowance)

What do you think? True or False Most teens who are 18 or 19 years old have a checking account True - Most teens who are 18 or 19 years old have a checking account (64%)

What do you think? True or False Ninety percent of high school students rely on their parents for information about money True

What do you think? True or False On average, American teens spend more than $10 billion a year False - On average, American teens spend more than $258 billion a year – That’s a LOT of Money!!

Sample Wants and Needs NEEDS Food for breakfast Clothes for school Transportation to school or work ______________ WANTS An iPOD DVD Players Cell Phone Hot Car ______________ 1-C

Do you need it or want it? Need Want

Values – what you think is important in life Getting a good education Religious faith or beliefs Social causes Handling money responsibly Friendships / The people I hang out with ____________________________ 1-D

The Five-Step Financial Planning Process 1-B

Discussion What happens if you don’t meet a goal/accomplish it on time? What would you say to someone who says goal setting is a waste of time? Discuss one financial goal, what it was, how you accomplished it and how you felt after you accomplished it?

Term Goals Within three months SHORT-TERM GOALS Within three months INTERMEDIATE-TERM GOALS Three months to a year – you already completed this LONG-TERM GOALS More than a year – Josh yours is a long term goal 1-E

S-M-A-R-T GOAL CRITERIA Specific Measurable Attainable Realistic Time-Limited 1-G

Specific…….. Measurable… Attainable….. Realistic……. Time-Limited.. SMART Goals Specific…….. “Pay for lodging, transportation, meals for a 5-day trip to Washington, D.C.” Measurable… “$300 through fundraising, $50 from birthday money, save $25 a week.” Attainable….. “If I stick to my plan, I’ll have the money when I need it.” Realistic……. “I still have enough money to live on while I work toward this goal.” Time-Limited.. “I need to have all the money by 6 months from now.” 1-H

Delayed Gratification Saving money over time to make a major purchase. Waiting to buy a new product until the price goes down. Waiting to see the latest movie until the crowds get smaller and the lines shorter. ____________________________________________________________________ 1-F

Decision Making Vocab Making decisions means thinking about choices and predicting consequences. Sometimes it means taking risks and giving up things we want. alternatives - choices; different ways to solve a problem; opportunities consequences - outcomes or results of a decision; what will happen depending upon what you choose to do; these risk - the possibility that your decision will result in a negative outcome; taking a chance; risk may involve losing money. opportunity cost - a trade-off. It refers to what you give up when a decision is made or the cost of giving up one thing in order to get something that you want more.

Factors That Affect Decision Making Age Factors That Affect Decision Making Needs Wants what about you? Society Time Culture Family Money Motivation Values Education Habits Attitudes 1-J

The Decision Making Process This process helps you select the best and most satisfying alternative from among a set of choices. 1. Define the problem- What is the problem to be resolved. Example: Need a car 2. Identify the Choices– Do your research. Identify and consider all alternatives. Example: Toyota Corolla/Honda Civic

The Decision Making Process 3. Evaluate the advantages and disadvantages of each choice – list advantages and disadvantages of each one. Opportunity Cost ~ The tradeoff that results from your decision. It is what you are willing to give up in order to have your first choice. Example: I’m willing to give up the convertible in order to purchase a sedan. Value can be measured in dollars, time, convenience, enjoyment, etc Why should the opportunity cost be carefully considered when making a decision?

The Decision Making Process 4. Choose the best alternative – Select the choice you believe will be the best for you at this time. 5. Act on your choice - Based on research and data gathered choose option best for you. Example: Buy the Honda Accord 6. Review your decision – After time has passed think about your decision again. What was good and not so good about your choice? If you had to do it over gain would you make the same choice? Were there consequences you did not identify?

The Decision Making Process Class project for a grade Create a poster by yourself (30 points) Poster to include: What problem do you need to solve? (10 points) Use the decision making process (steps 1-6) to help you decide. (15 points) Creativity (5 points) 30 points total