1. Personal Finance
Section 1-1

2. Warmup
Write a paragraph on why should you know how to plan your personal finances even if you can hire a financial planner?

3. Chapter 1 Personal financial planning Goals Values Opportunity costs
Key Terms
Personal financial planning
Goals
Values
Opportunity costs
Liquidity
Service
Good
economics
Economy
Supply
Demand
Federal reserve System
Inflation
Consumer
interest

4. Section 1-1 Personal Financial planning:
Is arranging to spend, save, and invest money to live comfortably, have financial security, and achieve goals
Goals—the things you want to accomplish

5. Financial Process
There are six steps to financial planning to help you achieve your goals.

6. Step 1—Determine your Current Financial Situation
Make a list of items that relate to your current financial situation such as:
Savings
Monthly job income
Monthly expense
Debts(money you owe)

7. Step 2—Develop your Financial Goals
Values are the beliefs and principles you consider important
For this step evaluate Needs vs. Wants
Needs are something you must have to survive.
Wants are something you desire or would like to have.

8. Step 3—Identify your Options
Think about all of the options of your goal
Also consider all of the outcomes
Considering both will help you make a good financial decision.

9. Step 4—Evaluate your Alternatives
Look at sources of Financial Information to keep up to date with economic and social conditions
Consequences of Choices are choosing one option and eliminating the rest of the options.
Opportunity costs– also called a trade off, is what is given up when making one choice instead of another.

10. Step 4 continued
Understanding risks—When you make a decision you also accept a certain risk
Inflation risk—if you wait to buy something it could cost more next year
Interest Rate Risk—interest rates go up and down and you risk paying the higher cost if you wait
Income risk—You might lose your job due to health problems, accidents, etc.
Personal risk—Having your friend help work on your house instead of a trained carpenter may save you money now but if it isn’t done right may cost more in the future
Liquidity risk is the ability to easily convert financial assests to cash without loss of value.

11. Group Activity
Divide students into groups of 3 or 4. Assign each group a financial goal. Have each group takes its goal through Steps 3 and 4 of the goal process devise a chart to illustrate their thinking.

12. Step 5—Create and use your financial plan of action
This will lists ways to help you achieve your goals.
Sticking to it will help guide you to reaching your goals

13. Step 6—Review and Revise your plan
As things change in your life so will your financial plan
Therefore you will need to change your plan to meet changing goals

14. Types of Financial Goals
Time Frame of Goals
Goals for Different Needs

15. Time Frame Goals Short-Term goals—take one year or less to achieve
Intermediate goals—take one to five years to achieve
Long Term goals—take more than five years to achieve

16. Student Activity
Students will create a powerpoint of their financial goals.
Slide 1 will be their title slide
Slide 2 will include a short-term goal and the plan for them to reach that goal
Slide 3 will include an intermediate goal and the plan for them to reach that goal
Slide 4 will include a long-term goal and the plan for them to reach that goal
All slides should include clip art

17. Goals for Different Needs
Service—task that a person or machine performs for you
Good—a physical item that is produced and can be weighed or measured.

18. Guidelines for Setting Goals
Be realistic
Be specific
Have a clear time frame
Decide what type of action to take

19. Activity
What do you think your goals will be?

20. Influences on Personal Financial Planning
Life situations
Personal Values
Economic factors

21. Life Situations
As you experience new things in life your financial decisions will change

22. Economic Factors
Economics is the study of the decisions that go into making, distributing and using goods and services
Economy is the ways in which people make, distribute, and use their goods and services.

23. Economic Factors Market Forces—
Supply—amount of goods and services available for sale
Demand—the amount of goods and services people are willing to buy

24. Economic Factors Financial Institutions—
Include banks, credit unions, and investment companies
Federal Reserve System—central banking organization of the United States

25. Research On the Internet look up and record the following:
Interest rates
Inflation rates
Consumer spending rates
U.S. Gross domestic product

26. Economic Factors Economic Conditions are affected by three things
Consumer Prices
Consumer Spending
Interest Rates

27. Consumer Pricing Over time most prices of products go up.
Inflation is the rise in level of prices for goods and services.

28. Consumer Spending
Consumer spending helps the economy by helping to create and maintain jobs
A consumer is a person purchase or uses goods and services.

29. Interest Rates The price of money is called interest
Interest is the price that is paid to use another’s money.

30. Journal In a Word document or Journal answer the following:
What are the six steps used to create a financial plan?
What is the relationship between the timing of your goals and the type of good or service that you want?
What are two economic factors that affect financial decisions? How might these factors influence your financial planning?
Why is it important to distinguish between your needs and your wants?