Personal Finance: Managing Money Econ 10/12

Warm Up Are these money habits sensible or unwise? Stopping for fast food on the way home everyday Putting spare change into a jar every night Saving for college Buying extravagant gifts for friends What are some of your money habits?

Gotcha! What is in the store window to get you to walk in? What techniques are used to get you into the door? What is the first thing you see when you walk into the store? Are you ever tempted to buy it? What do you have to walk past in order to get to the object you want to buy? Did you ever pick up anything on the way? When standing in line at the register, have you ever picked up anything on display to buy? When you get your item, do you receive any coupons or flyers that will encourage you to come back? Do they have expiration dates?

Making Goals and Priorities We all fall for marketing tactics but by planning ahead and having a good sense of your goals and priorities you can avoid personal finance problems Many of us have multiple financial goals (own a house, buy a car, go to college, have a family, etc.) When you have more than one financial goal you must prioritize them and decide which is most important to you

Is it a Want or a Need? Needs: things that are essential to your health and safety Ex. Water, basic meals, place to live, transportation to work/school Wants: things that can make life more interesting or fun but you can get by without Ex. Music, snowboard, ice cream, air conditioning

SMART Goals Financial goals need to be “SMART” Specific: What needs to be accomplished? Who/where/why? Measurable: How will you know if you have succeeded? How much change needs to occur? Attainable: Do I have (or can you get) the resources? Is it a reasonable stretch? Relevant: Are you willing to commit? Will it stop you from a more important goal? Time-Bound: When is the deadline? What can you do today?

Spending Plan Establish your goals and priorities and plan in advance to: Make progress towards your goals Avoid “traps” and buyers remorse Deal with unexpected costly events Have money on hand when you need it Put you in control of how your money is used

Predicting your Income Types of income: pay, allowance, interest, monetary gifts, sales Use what is known: Pay or regular allowance Be conservative: When estimating, aim lower rather than higher

Predicting your Expenses Research before you buy Watch for different prices in the store and online Calculate shipping and sales tax Find out if there are any additional costs you will have if you make the purchase Check out customer reviews Know the return and repair policies

***Ideal situation: Spend at or BELOW your means Pay Yourself First! Set aside money for big ticket items Avoid borrowing, which ends up costing you more money Save a little every money and let it build interest ***Ideal situation: Spend at or BELOW your means Income > Expenses

If your Spending Plan is not Working Compare your actual income with anticipated income Compare your actual spending with planned spending Make adjustments: Increase your income Decrease your expenses Combo of both When life changes (you start a family, get a different job, take time to go to school, etc.) the plan has to change as well!