Unit 1: Banking Section 1: Financial Decisions and Goals Financial Literacy Mrs. Hoke

Goals

Personal Financial Planning Arranging to spend, save, and invest money to live comfortably, have financial security, and achieve goals.

Step 1: Determine your current financial situation. GRADED TASK: For the next two weeks keep track of EVERYTHING you spend money on and all of the money you make! Savings Monthly Income Monthly Expenses Debts

Step 2: Develop Your Financial Goals Values are the beliefs and principles you consider important, correct, and desirable. (These are different for every person.) NEED vs. WANT

Step 3: Identify Alternative Courses of Action Continue the same course of action. Expand the current situation. Change the current situation. Take a new course of action.

Step 4: Evaluate Your Alternatives RESEARCH so that you make the BEST decision. Common places to find research. The Internet Financial institutions (Banks) Media Sources (Newspaper, magazine, TV, or radio) Financial Specialists (Financial planners, lawyers, tax preparers)

FINANCIAL RISKS Inflation risk: Prices may increase Interest Rate Risk: Interest rates go up and down Income Risk: You may lose your job due to unexpected circumstances Personal Risk: Risk of life and health versus saving money. Liquidity Risk: Some long-term investments are difficult to convert to cash value quickly. Liquidity is the ability to easily convert financial assets into cash without loss in value.

Step 5: Create and Use Your Financial Plan of Action

Step 6: Review and Revise Your Plan Reevaluate and revise your plan yearly.