Personal Finance Unit 1 INCOME                                       Personal Finance Unit 1 INCOME “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. 13,54

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. 63, 49

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. 94, 56

Financial Planning Process                                                                                            Financial planning is an ongoing, thinking process, not just an event or a product. Financial plans need to be revised over time a important circumstances change.

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

Assignment 1.1 page 4 “My Needs and Wants: Can I Tell the Difference”

Values The beliefs and practices in your life that are very important to you. Family Friends Teachers Church Work

Assignment 1.2 My Values Page 5

Specific Measurable Attainable Realistic Time-bound

SMART Goals Timelines Short Term Intermediate Term Long Term Up to three months Intermediate Term Three months to one year Long Term Longer than one year DELAYED GRATIFICATION

Assignment 1.3 My SMART Goals Page 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.

Assignment 1.4 Personal Spending Record Page 8

Step 3 Create A Plan

Decision Making The process of considering and analyzing information in order to make a decision.

Factors that Can Influence Your Goal Setting and Decision Making

Opportunity Cost Choosing one option may mean giving up altogether another goal. It’s a tradeoff!

Assignment 1.5 My Decision Pros Cons

Step 4 Implement the Plan

Three Rs of Money Reality Responsibility Restraint

Monitor and Modify the Plan 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