Introduction to Business and Marketing

Explain the steps involved in the financial planning process. Identify sources of financial information. Discuss sources of risk. Discuss the consequences of choices.

 Financial planning provides a solid foundation for making financial decisions. It involves looking at your financial position and setting goals.  Read “Teach Your Teens Financial Responsibility”

 Personal financial planning will help you reach your goals  Includes spending, saving and investing your money in a way that provides enjoyment AND financial security

Determine Your Financial Situation Develop Your Financial Goal Identify Possible Courses of Action Evaluate Your Alternatives Implement a Financial Plan of Action Review and Revise Your Plan

 Make a list to help you determine your financial situation  A good way to estimate your expenses is to carefully track them for one month

 Think about your attitude toward money ◦ Do you want to spend money now or save for the future? ◦ What are your wants and needs? ◦ Do you want to get a job right after high school or continue your education?

 Consider your options before making a decision  Generally you will have several possible courses of action

 Use sources of financial information to help you evaluate your alternatives.  Consider the consequences and risks of each decision you make.

 A plan of action is a list of ways to achieve your financial goals.  If your goal is to increase your savings, a plan of action could be to cut back on spending, or get a part-time job.

 As you get older, your finances and needs will change.  You should reevaluate and revise your financial plan every year.

 The Internet  Magazines  Newspapers

 When you make a financial decision, you also accept certain risk. Types of Financial Risk Inflation Risk Inflation is the general increase in the cost of goods. If you wait to purchase you could risk the price increasing Interest Rate Risk Interest rates rise and fall, which may affect the cost of borrowing or the profit you earn off investing Income Risk Your income may rise and fall (lose your job or get a better job) Personal Risk Some choices increase risk Liquidity Risk Liquidity is the ability to convert your recourses into cash easily without losing value

 Insurance can minimize risk by protecting investments like houses and cars  Diversification – spreading wealth out over different types of investments

opportunity cost  An opportunity cost is sometimes called a tradeoff. ◦ It is whatever you give up when you make a choice

 Lawn and Order - Why its Important to Save Lawn and Order - Why its Important to Save  Debt of a Salesman - Debt and Borrowing Money Debt of a Salesman - Debt and Borrowing Money