1. Where It All Begins Financial Responsibility and Decision Making:
Learner Objectives
Students will:
Examine the role of financial decisions in their financial literacy and security
Notes on the Program
This is a basic introduction to understanding the impact of financial decisions on financial capability and literacy. Try to pick out the portions that fit both your time frame and your participants’ knowledge level.
Financial Responsibility and
Decision Making:
Where It All Begins
NORTH DAKOTA PERSONAL FINANCE EDUCATION

2. “Most people don’t plan to fail. They simply fail to plan!”
Have your parents ever refused to buy you some things you really wanted? Maybe they were new clothes, tickets to a show or the latest electronic gadgets, and you just didn’t have enough money to buy them yourself.
Have you ever wanted to buy something big, such as your own computer or car? Or dreamed about becoming a multimillionaire and retiring at 40? Doing all of these things is possible for you if you get savvy about managing your money.
In this unit, you will begin your journey toward savvy money management by learning about the financial planning process. People who “have it all” didn’t get there by accident. They made a financial plan and followed it. You will use what you learn in this unit to create your own personal financial plan. Later, we’ll build upon this by discussing ways to follow it and other aspects of managing your money.

3. The Financial Planning Process
Financial planning is a thought process based on what each of us considers most important. What do we want to achieve in life? What do we want to be, do and have? A financial plan helps us identify the end result we want, figure out how to get there and stay on track to achieve it.
How can you use this in your life?
You will use what you have learned in this unit to create your own personal financial plan.
In the process of creating your financial plan, you will:
Examine the value of having a process of planning how to use money
Create personal financial SMART goals
Analyze how money is received and used
Use the decision-making process to create a financial plan
Identify guidelines to implement a personal financial plan
Monitor and modify a personal financial plan
You will know you have succeeded when:
Your financial plan includes at least one short-term SMART goal (zero to three months)
Your financial plan includes at least one intermediate-term SMART goal (three months to one year)
 Your financial plan includes at least one long-term SMART goal (more than one year)
 Your financial plan includes a [week/month] record of how your money has been received and used
 You show your decision-making process to allocate your money
 You describe at least two factors that will impact your plan
 You list at least three strategies to use to follow your plan
You explain how you will monitor your plan

4. Sample Wants and Needs NEEDS Food for breakfast Clothes for school
Transportation to school or work
______________
WANTS
Cell Phone
iPad/Laptop
Hot new shoes
New car
______________
Do You Need It or Do You Want It?
Let’s face it; sometimes we say we “need” things that we actually don’t. Needs are the very basic things we must have to survive. Wants are the things that make life more interesting and fun, but you could live without them if you had to. You need food to eat, but you want to eat pizza out with your friends. You need a place to live, but you want a TV in your room. You need some clothes to wear, but you want those designer jeans. Everyone has wants, but when your wallet is looking thin, needs have to come first.
We begin with learning the difference between needs and wants. Because resources are limited, we must learn to prioritize our goals, and needs usually come first. Having wants Is OK. Wants often motivate us to succeed. The key is being able to distinguish between a want and a need and to use that understanding when we make important choices and decisions.
Decision making plays an important role in the financial planning process. We must make choices to maximize our ability to accomplish our goals with limited resources. Making effective decisions involves a set process, which we may not even realize we’re using. Of course, some decisions will create the need to make even more decisions.
Having enough money to spend on every single want is rare. Studies show that even multimillionaires believe they need about twice what they have to feel worry-free. So everyone has to make choices and set priorities. A good financial plan helps you through that process. For example, the plan makes you think about your needs and wants.
Polarity Activity
Time: 10 minutes
Materials: Two signs, one labeled NEED and the other WANT; masking tape
Directions:
Hang signs at opposite ends of the room. Arrange students in the center of the room between the two signs. Tell the students that you are going to name something (see ideas below). Each person should decide whether the item named is a “need” or a “want” and should move to the respective end of the room. After everyone has moved to one end or the other, survey a few members from each group. Ask the individuals why they think something is either a need or a want; ask for examples.
Ideas for the NEED or WANT list:
Automobile
Telephone
Newspaper
Athletic shoes
Business suit

5. Delayed Gratification
Saving money through time to make a major purchase
Waiting to buy a new product until the price goes down
Waiting to see the latest movie until the crowds get smaller and the lines shorter
__________________________________________________________________________
Delayed gratification is waiting to enjoy something and incorporates careful planning.
Can you think of other benefits of delayed gratification?
Discuss the benefits of delaying a purchase.
Ideas to consider:
Saving for a down payment on a car
Waiting to buy a video game until the price is discounted

6. Values Getting a good education Religious faith or beliefs
Social causes
Handling money responsibly
Friendships/people I hang out with
______________________
Values are the beliefs and practices in your life that are very important to you. So many things can influence your values: your parents, other family members, friends, your religion, things you read and experiences you have. Your values even may change through time as you learn and do new things. Values are a huge influence on your goals.
The point is that you have a set of values. And they affect all the choices you make, including your choices about money. Maybe you believe donating money to charity is important. Or maybe you’d rather have money in the bank than a new car of your own. These types of beliefs and practices reveal your values about money. Knowing what they are makes it much easier to create a plan for getting the things you really want.
Have students complete the Values Survey Activity found in the NEFE materials. (See Supplementary Materials - SM1-3.)

7. Goals Within three months Three months to a year More than a year
Short-term Goals
Within three months
Intermediate-term Goals
Three months to a year
Long-term Goals
More than a year
Goal setting is the foundation of the financial planning process.
You probably know that a goal is something for which you aim. It’s something you want to be, do or have at some future time. It points you in the direction you need to take. Achieving a goal gives you a sense of accomplishment, which spurs you on to setting new goals for even bigger and better things. So learning to identify and set clear goals is key to your success in life.
If one of your personal goals is to go to college the same year you graduate from high school, you know you have to take the ACTs, decide which schools to apply to, and mail applications by certain deadlines. Knowing what you’re aiming for makes mapping out a process to see what you have to do to meet your goal a lot easier. But if you don’t set the clear goal of going to college the same year you graduate from high school, you easily could miss some of the things you need to do to meet your goal.
Setting clear financial goals is also important. Finding the money for a June trip to Florida Is easier if you decide in January that this is what you want, then make a plan to save for it, instead of trying to scrounge up the money to go at the last minute.
One thing you need to know about your goals is how long you expect they will take to accomplish. Goals that you want to achieve within the next three months are called short-term goals. Goals that are set for three months to a year are called intermediate-term goals.
Long-term goals are ones that will take you more than a year to achieve.

8. S-M-A-R-T GOAL CRITERIA
Specific
Measurable
Attainable
Smart goals are specific, measurable, attainable, realistic and time-limited (refer to slide)
Realistic
Time-limited

9. Specific…….. Measurable… Attainable….. Realistic……. Time-limited..
SMART Goals
Specific……..
“Pay for lodging, transportation, meals for a 5-day trip to Washington, D.C.”
Measurable…
“$300 through fundraising, $50 from
birthday money, save $25 a week.”
Attainable…..
“If I stick to my plan, I’ll have the money when I need it.”
Realistic…….
“I still have enough money to live on while I work toward this goal.”
Here is an example of SMART goals.
Assignment: Have each student come up with SMART goals for something they want out of life.
Time-limited..
“I need to have all the money by 6 months from now.”

10. The Five-step Financial Planning Process
Financial goals are accomplished by applying the ongoing, five-step financial planning process represented by the graphic (see Slide 10 - The Five-Step Financial Planning Process).
We already have discussed setting SMART goals. Let’s look at analyzing information next.

11. Spending Record $35.00 $6.00 $4.00 $7.00 $5.00 $8.00 $15.00 $15.00
The second step in the financial planning process is to analyze information and find out where your finances stand so you can see exactly how much money you’re getting and how much you’re spending or saving. Let’s start with your income. Where do you get money from? Do you receive an allowance? Do you have a job or your own business? How much do you earn each week?
Next, how much money do you spend each week and on what are you spending it? Do you owe money to anyone for the stuff you’ve bought? Whether you got a loan to buy your first car or you borrowed money from your parents to buy a new jacket, you owe money to others and need to be aware of that debt.
Questions such as these are critical because their answers have a direct impact on your ability to achieve your financial goals.
Being a Responsible Spender
You have a choice when handling money. Life is a lot easier if you handle it wisely and respectfully and take personal responsibility for your decisions and actions.
How are you going to make sure you stay on track to meet your financial goals? In later units, we’ll talk about specific things you can do with your money to help you stay on target. But one thing you can do today is to find someone, such as a family member, to encourage you to be accountable for your goals. Share the goals you wrote down earlier. Talk about your plan. Then ask him or her to check in with you once a week or so to see how you’re doing. Your odds of success are much better if you have a “partner” to help motivate you. Working with someone almost always is easier than doing it alone.
One way to be a responsible spender is to be able to find and evaluate financial information from a variety of sources. When making purchases, consider unbiased product ratings, such as those provided by Consumer Reports.
Another way is to become familiar with major consumer protection laws. For more information, visit Here are links to various U. S. consumer protection laws and information on the following topics:
Automobiles
Investments
Credit
Privacy
Diet, Health and Fitness
Products and Services
E-commerce and the Internet
Scholarship and Employment Services
Energy and Environment
Telemarketing
Franchise and Business Opportunities
Telephone Services
At Home
Tobacco
Identity Theft
Travel
Bring in Consumer Reports magazines so students can become familiar with them.
Have students track income and spending for a week.
Have students team up to provide reports on various consumer protection laws.
$55.00
$40.00
$15.00

12. Factors That Affect Decision Making
Age
Factors That Affect Decision Making
Needs
Wants
What about you?
Culture
Family
Time
Society
Money
Motivation
Making Decisions
Step Three is creating a plan.
Financial planning requires making many decisions, and making decisions about money can be particularly challenging because so many things come into play. For one, you have the facts of the situation, such as your spending log. But many other things can affect your decisions as well: your mood, values, culture, habits, and opinions of your friends and parents.
Some decisions are easy, such as deciding which movie to see. Of course, others are more complicated and require more thought. But whether the decision is easy or hard, everyone follows a basic process: the six stages of decision making that you may not even realize you already go through. So let’s see how this works by analyzing an easy decision. Pretend you’re going to see a movie with your friends and it’s sold out. What do you do?
Of course, not all decisions are created equal. Some are just a blip on the radar screen, while others will have a lasting impact on your life. In fact, some of the personal and financial decisions you make today will affect decisions you will make far into the future. For example, if you take out a loan to buy a car, you could be making payments on it for the next five years. So for the next 60 months, you will have less money to put toward other things you may want.
Values
Education
Habits
Attitudes

13. Decision-making Process
Identify Your
Goal
Establish
Criteria
Weigh Pros
and Cons
Make a Decision
Here is a decision-making process that can help you make good financial decisions:
1. Identify your SMART goal. Yes, you still want to see a movie.
2. Establish your criteria. Consider what type of movie you want to see, when you want to watch the movie and how much money you want to spend. By identifying your expectations in advance, you can eliminate choices that don’t meet your wants and needs.
3. Examine your options. Think about whether you want to buy tickets now for a later showing of the sold-out movie, see another one that will be starting soon or rent a movie to watch at home.
4. Weigh the pros and cons. Consider how your options meet your criteria. You really don’t want to wait a couple of hours, and another film you want to see is playing soon.
5. Make your decision. Decide which option best meets your criteria. Decide to buy the tickets for the movie that is playing now.
6. Evaluate results. Afterward, talk with your friends about whether you liked the movie. Two of the most important elements in the decision-making process are examining your alternatives and analyzing your outcomes. So let’s look at these two elements a little further.
Evaluate
Results

14. Satellite Decisions
Often a major decision leads to several smaller ones, sometimes called satellite decisions. Once you’ve decided to buy a car, you have to decide what kind of car to buy, how much money to put down, what dealer to buy it from and when to buy it. These are satellite decisions, which may lead to even more satellite decisions. Let’s say you know which car you want. Now you have to decide which color and options package to get.
Discussion
Ask the following questions:
What influences your decisions on minor purchases? Major purchases?
By thinking about criteria in advance, how might a person save time or money?
How does one decision affect others?

15. The Decision-making Process
Decision Making and Financial Planning
The Financial Planning Process
The Decision-making Process
Evaluate
Results
Make a Decision
Identify Your
Goal
Weigh Pros
and Cons
Establish
Criteria
Monitor and Modify
the Plan
Implement
Set Goals
Create a Plan
Analyze
Information
Related to the decision-making process is the financial planning process. Your financial decisions are all part of your overall financial plan.

16. Creating and Implementing a Plan
Identify Your
Goal
Decide where to eat
Establish
Criteria
Step Four: Implement the Plan, Making It Happen
Guidelines for Sticking With Your Plan
Write your goals on an index card or find pictures of your goal and post them in a place you’ll see every day. Tell other people about your goals. Also, ask someone to check in with you about your progress; knowing someone is going to ask about it is good motivation.
When you’re going to spend money, decide how much you’ll need ahead of time and take only that amount so you’re not tempted to spend more. Review your plan regularly so you know when you’re starting to stray and can make adjustments quickly.
What might hold you back from meeting your goals?
You need to consider any potential roadblocks that may affect your ability to meet your financial goals. Some roadblocks are beyond your control. For example, the concert tickets you want might be sold out, or your paycheck might be small because you weren’t scheduled to work as many hours as originally planned. Anticipate any roadblocks, and leave room for flexibility in your financial plan.
How are you going to make sure you stay on track to meet your financial goals? In later units, we’ll talk about specific things you can do with your money to help you stay on target. But one thing you can do today is to find someone, such as a family member, to encourage you to be accountable for your goals. Share the goals you wrote down earlier. Talk about your plan. Then ask him or her to check in with you once a week or so to see how you’re doing. Your odds of success are much better if you have a “partner” to help motivate you. Having someone to help almost always is easier than doing it alone.
Many people find that talking about money is difficult. Unfortunately, not talking about money can have severe consequences. Many couples cite money problems as a factor in divorce. Consumers find they have been taken advantage of when they do not ask for estimates before buying goods and services. And many families are forced to deal with additional stress after the death of a loved one when financial matters were not communicated beforehand.
Some key points to remember when talking about money are:
Remember that individual values, attitudes and goals influence money behaviors.
Take ownership of your own money decisions and attitudes.
Take responsibility for the consequences of your financial decisions. 1. 2. 3.

17. REALITY RESPONSIBILITY RESTRAINT
Step Five: Monitoring and Modifying Your Plan
Once you start implementing your financial plan, you need to check to make sure that you’re staying on track. The best way is to decide to review your plan and your progress at regular intervals, such as every two weeks or every month. The more often you do this, the sooner you’ll catch yourself if you start straying off course.
A plan isn’t meant to be written in stone. It’s a living document that should change as things in your life change. You may run into unexpected obstacles or expenses. Your goals may change, or your resources may vary. You may even receive money that you didn’t expect. That’s just life, and it’s totally normal. Therefore, you should review your plan whenever you have significant changes in your life. This includes whenever your finances change, such as getting a promotion and a raise or quitting your job. But it includes life changes as well. For example, you might start dating someone or move to a new city. All of these events can create a need to update your financial plan.
Mock Family Events Activity
Time: 10 minutes
Materials: Cards with mock family scenarios
Directions:
Write family scenarios on index cards. Arrange students into “family groups” based on the card scenarios. Tell the students that they will be grouped into mock family situations, and distribute one scenario card to each group. Tell the family groups to think about what types of financial decisions might need to be made for the given scenario. After the teams have developed their lists, discuss any similarities and differences in types of financial decisions. Ask the families to identify at least two potential unexpected events that might impact the family financial planning.
Ideas for family scenarios
Newly married couple in their 20s, rent home, two full-time jobs
Single parent with two school-age children, owns home, full-time job
Couple in their 60s, one spouse self-employed, one spouse working part time, own home
Couple in their 40s, two teenagers, one of whom is graduating from high school
Single, in his or her 30s, rents apartment, anticipates job layoff

18. SAVING SPENDING SHARING
Most people agree that you can find the most enjoyment with your money through a combination of spending, saving and sharing. By having a financial plan based on smart goals that relate to your personal values, you can succeed!

19. Ready Set Go
Ready Set Go