Financial Planning

LEARNING OBJECTIVES Standard 1: Students will use a rational decision-making process to set and implement financial goals. Objective 1: Explain how goals, decision-making, and planning affect personal financial choices and behaviors. Discuss personal values that affect financial choices (e.g., home ownership, work ethic, charity, civic virtue). Explain the components of a financial plan (e.g., goals, net worth statement, budget, income and expense record, an insurance plan, a saving and investing plan). Compare short-term and long-term financial goals.

What is your first experience or memory with money?

What does the road ahead of you look like? DFGDF What road are YOU on? Show the PPT of the pictures. Ask students to think of each picture as a representation of their financial plan. For example, are you out of control driving on slick roads, meaning we have no control of our money and just going with whatever direction we feel like when spending? Give them 3-5 minutes to identify which picture depicts their own financial plan and that of family members or people they know. After they have identified a picture that represents their financial plan, have them silently answer the following questions: Who else is in the car? What is in the trunk? How far down the road will you travel? Why did you choose this road? What was the last thing you did before getting in the car? What will you do first when you get there? If you went down this same road again, what would you do different? In PLAY mode in the PPT, click the mouse. The picture of the sheep will be displayed. Ask the last question: “What unforeseen obstacles might be ahead?” Have students take 2 more minutes to analyze what feelings this driver is experiencing. Ask, “Was this driver prepared?” How much different would his experience be with a full tank of gas? Running low on gas? What if a passenger was injured? How does that differ than if he was 2 blocks from home? Help students understand they are guaranteed to have difficult and challenging times in their financial lives. The only thing they can do to make those experiences more bearable is to start planning for them now!

“If you don’t know where you are going, any road will take you there.”

STANFORD MARSHMALLOW EXPERIMENT Try the experiment on students. As a class, discuss how delayed gratification often loses to immediate satisfaction. What are the costs of this behavior?

Financial Planning Is a process of setting goals, developing a plan to achieve them, and putting the plan into action.

How can it be compared to financial planning? What is this? What is it used for? What is this? What is it used for? More than budgeting More than investing Financial planning is a thinking process that helps achieve goals. A blueprint or plan for managing all components of a person’s money. Arranging to spend, save, and invest money to live comfortably, have financial security, and achieve goals. How can it be compared to financial planning?

Who is Financial Planning for?

have a financial plan?

FINANCIAL

You know where to use money to achieve your goals

Less chance of going into debt you cannot handle

Components of a Financial Plan Goals Net Worth Statement Budget Insurance Plan Savings Plan Investment Plan

How do I make a Financial Plan? Determine your current financial situation. Make a list of items that relate to your finances: Savings/Investments Monthly Income (Job Earnings, Allowance, Gifts, Interest) Monthly Expenses Debts

How do I make a Financial Plan? 2. Develop your financial goals. Consider your attitude toward money. Ask yourself the following: How do I determine if it is more important to spend money now, or save it for the future? How do your personal values affect your financial decisions?

How do I make a Financial Plan? Identify your options. Continue the same course of action. Expand the current situation. Change the current situation. Start something new.

How do I make a Financial Plan? 4. Evaluate your alternatives. Consider the risks and consequences of each decision you make. Be aware of all sources of financial information. Evaluate consequences of choices, both good and bad. Understand risks involved with choices.

How do I make a Financial Plan? 5. Create and use your financial plan of action.

How do I make a Financial Plan? Review and revise your plan. As we get older and our circumstances, our finances, needs, and wants will change, therefore, our financial plan must be flexible as well.

The beliefs and practices in your life that are very important to you

FAMILY

FRIENDS

H O N E S T Y

INDEPENDENCE

RELIGION

Your Financial Values Inventory

Scarcity “Scarcity is an economic principle stating that because of limited resources, an economic system cannot possibly produce all the goods and services that people want; therefore, choices must be made about how the limited resources will be used.” -Consumer Economics & Education, Glencoe, 2003

WANT VS NEED GAME

What Is The Difference?

What are BASICS OR ESSENTIALS

FOOD

CLOTHING

SHELTER

ARE THERE OTHER NEEDS

Simply increase the quality of living WANTS Simply increase the quality of living What does that mean?

Take a few minutes to complete exercise 1A on page 4. Needs vs. Wants Take a few minutes to complete exercise 1A on page 4.

DO YOU AGREE OR DISAGREE? Values strongly influence our spending habits. We don’t usually spend our money on things we do not feel are important. Typically, the more important something is, the more we are willing to spend on it. DO YOU AGREE OR DISAGREE?

FINANCIAL VALUE INVENTORY ACTIVITY

What Are

A written statement of something a person wants or needs to accomplish. What Are Some Examples Graduate from high school Earn a college degree Buy a car Get a job Lose 15 pounds

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

Time-bound Short Term Goals Medium Term Goals Long Term Goals Present to 6 months 6 months to a year 1 year and longer

Assignment On a piece of cardstock, complete the following. On one side, write one short term goal, one intermediate goal, and one long term goal. MAKE SURE THEY’RE SMART, FINANCIAL GOALS! Underneath each goals create an action plan of steps or tasks you will need to take to achieve that goal. List any possible barriers to achieving your goal. On the other side, create a collage (visual representation) of your goals. Make sure you include a visual for the three goals you listed but you may present more if you wish. See samples if needed.

Writing Prompt Write a paragraph identifying one of your long or short-term goals. Explain how it reflects your needs, wants, values, and priorities. Write an action plan to achieve the goal, including tasks, timelines, resources needed, and barriers anticipated.