1. Personal Financial Planning

2. What Kind of Car do you want?
Everyone can think of several things they would really like to have, but can’t because they don’t have the money. Everyone falls into one of two groups:
Dreamers
Achievers
Goals are things you want to accomplish. Examples: buying a car, getting a college education, starting a business.
Your goal will change as you grow older and your lifestyle and responsibilities change. No matter what goals you have now, or how they will changes, the method for achieving them remains the same.

3. Financial Decisions and Goals
What is personal Finance?
Personal financial planning is arranging to spend, save, and invest money to:
live comfortably
have financial security
achieve goals

4. Planning your personal finance
Benefits of planning
You have more money and financial security
You know how to use money to achieve your goals
You have less change of going into debt you cannot handle
You can support your family

5. Plan your success A plan increases your chance for success.
Make a written plan with the steps to take and the order in which the steps must be taken.

6. The Pizza Principle
You eat a pizza the same way you accomplish any big job; one bite at a time.
Break down any big goal into bite-size steps that must be taken to reach the goal.
Schedule the steps in chronological order, in time to reach your goal by your deadline.
Planning is a way of bringing the future into the present, enabling you to determine the things you have to do today, next week, and in the weeks to come to succeed in your goal.

7. Financial Planning Process
Step 1: determine your current financial situation
Make a list that relates to your finances
Savings
Monthly income (job, allowance, gifts, interest)
Monthly expenses
Debts (money you owe)

8. Financial Planning Process
Step 2: Develop your financial goals
Is it more important to spend money now or save for your future?
Would you rather get a job after high school or continue your education?
Do your personal Values affect your financial decisions?
Values are the beliefs and principles you consider important, correct, and desirable. Different people value different things.
Understand the difference between wants and needs
Need is something you must have to survive
Want is something you desire or would like to have/do

9. Financial Planning Process
Step 3: Identify your options
Expand the current situation
Change the current situation
Start something new
Continue the same course of action

10. Evaluate your Alternatives
Look at your situation in life
Present financial situation
Personal values
Consider the consequences and risks of each decision you make
Research financial decisions
Consequences of choices
Understand risks

11. Consequences of choices
When you choose and option , you eliminate other possibilities
You cannot choose all options
Opportunity Cost, or trade-off, is the what is given up when making one choice instead of another
**However, choosing involves knowing what you gain as well

12. Understanding risks
When you make financial decisions, you accept certain financial risks as well
Inflation risks
Interest Rate Risks
Income Risks
Personal Risks
Liquidity Risks
*liquidity is the ability to easily convert financial assets into cash without loss of value

13. Financial Planning Process
Step 5: Create and Use Your financial Plan of Action
Ways to achieve your financial goals

14. Financial Planning Process
Step 6: Review and Revise your plan
Some plans need to change
Reevaluate and revise your financial plans periodically

15. Developing personal financial goals
Types of financial Goals
Time Frame Goals
Goals for needs

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

17. Goals for Different Needs
How you establish and reach your financial goals will depend on whether a goal involves the need for consumable goods, durable goods, or intangible items.
Goods—a physical item that is produced and can be weighed or measured
Services—a task that a person or a machine performs to you
Consumable goods—purchases that your make often and use up quickly.
Durable goods—expensive items that you do not purchase often.
Intangible items—cannot be touched but are often important to your well-being and happiness

18. Guidelines for setting goals
Realistic
Specific
Clear time frame
Help you decide what type of action to take

19. How to get what you want
The difference between a wish and a goal is how it is stated You can change a wish into a goal with this simple process. A goal must:
Be realistic
Be specific
Have a deadline (Time Frame)
Have a price tag

20. Goal Setting Goal Target Date Estimated Cost
Attend 3-week session with Vintage Film Restoration Society at FYI
Next July
$1,800
A. Save $1,800
By June 15
Find a Job
Open a Savings Account
Deposit $200 per month
Start now
After First Check
October to June
Limited Social Life
Thirty Minutes
$200 per month
B. Complete Class
Before May 31
Register for class
Take class
Mail certificate
By December 9
Begin January 10
After last class
$300
2 hours/wk for 10 weeks
15 minutes
C. Prepare for trip
By June 30
Make airline reservation
Send check for lodging
Get Traveler’s Checks
By January 1
By June 10
$400
$800

21. Your goals Goal 1 Goal 2 Goal 3 Realistic (Yes or No)
Goal 1
Goal 2
Goal 3
Realistic (Yes or No)
List specifics of the goal
Clear time frame for achieving the goal
Price
Life Situations
Personal Values
Economic Factors—Prices, Spending, Interest Rates
Your goals

22. Influences on personal financial planning
Life situations
personal values
Economic factors

23. Economic Factors
Economics—the study of the decisions that go into making, distributing, and using goods and services
Market forces, financial institutions, global influences, and economic conditions affect global as well as personal decisions