1. Horizonte Financial Literacy Course
FINANCIAL PLANNING
Horizonte Financial Literacy Course

2. Steps of Economic Reasoning
People Choose (determine the choices)
All choices involve costs
Four types of cost: monetary, time, energy, opportunity
People respond to incentives in predictable ways
People gain when they trade voluntarily
People’s choices have consequences which lie in the future.

3. Opportunity cost:
Opportunity cost: The value of the second-best alternative that a person gives up when making one choice instead of another.

4. What is Financial Planning?
More than budgeting.
More than investing.
Financial planning is a thinking process that helps achieve goals.

5. "If you don't know where you are going, ANY ROAD will take you there."
Cheshire Cat, Alice In Wonderland

6. Financial Planning
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.

7. What are the Components of a Financial Plan?
Goals
Net Worth Statement
Budget
Insurance Plan
Savings Plan
Investment Plan

8. Benefits of Having a Financial Plan?
You have more money and financial security.
You know where to use money to achieve your goals.
You have less chance of going into debt you cannot handle.

9. 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

10. 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?

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

12. 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.

13. How do I make a Financial Plan?
5. Create and use your financial plan of action.
Just DO it!

14. How do I make a Financial Plan?
6. 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.

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

16. Time-Bound Goals Short Term Goals Present to 1 year Long Term Goals
1 year and longer

17. S.M.A.R.T. Goals
S = Specific - State exactly what you hope to accomplish.
M = Measurable – Write exactly what you will do.
A = Attainable – Determine what needs to be done to reach your goal.
R = Realistic – Ask yourself, “Is it feasible?”
T = Time-Bound – When will you have accomplished (or strived to reach) your goal?

18. Factors that Influence Decisions
Values
Peers
Habits
Consequences
Family
Age
Feelings (love, anger, rejection)
Risks
Society

19. 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.

20. Values
The beliefs and practices in your life that are very important to you.
Family
Friends
Work
Honesty
Self Reliance
Independence
Religion

21. NEEDS vs WANTS NEEDS Essentials…the basics of life. Food Clothing
Shelter

22. NEEDS vs WANTS
WANTS
Simply increase the quality of living.

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

24. Steps for Decision Making
Set Goals
Analyze Information
Create a Plan
Implement the Plan
Monitor and Modify the Plan

25. Choices 3 Big Questions How am I going to make money? 3 options
College/ post secondary training
Stats go here
Entrepreneurship: as traditionally been defined as the process of designing, launching and running a new business, which typically begins as a small business, such as a startup company, offering a product, process or service for sale or hire.

26. Choices 3 Big Questions cont.
Labor
Retail Service
Cashier, customer service rep, merchandise contributer
Food Service
Waiter, hoster, cook
Manual service
Hotels, cleaner, construction

27. Choices 3 Big Questions cont.
Who is going to be my support system? Who am I going to support?
Partner/spouse
Children/parents
pets
LIVING: “DO YOU WORK TO LIVE, OR LIVE TO WORK?”

28. Choices 3 Big Questions cont.
HOW AM I GOING TO USE MY MONEY?
Consumerism/consumption vs Asset accumulation
1. Eating Out
1. Saving
2. Name brand clothing
2. Investing
3. Entertainment
3. Training/education
4. Gas
4. Housing
5. Experiences
5. Asset appreciating purchases
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