1. “The dictionary is the only place where success comes before work.”
Objective 8.03
Students will apply procedures to manage personal income and expenses.
Mark Twain once said,
“The dictionary is the only place where success comes before work.”
“Building Mu$cle” is much the same. It takes hard work and discipline, much of it done out of the limelight.

2. Essential Questions What are the principles of financial planning?
What are the elements of spending plans?
What are the steps in the spending plan process, and how is each used?

3. Principles of Financial Planning
We need to learn to live by these principles in order to be:
more financially independent and
in control of our finances.

4. Principles of Financial Planning (Jump$tart Coalition)
Money doubles by the “Rule of 72”
Your credit past is your credit future
Start saving young
Stay insured
Budget your money
Don’t borrow what you can’t repay
Map your financial future
Don’t expect something for nothing
High returns equal high risks
Know your take- home pay
Compare interest rates
Pay yourself first
The Jump$tart Coalition,

5. Money doubles by the “Rule of 72”
Percentage Return
72 Divided by Return
Years to Double Money
20%
72 divided by 20
3.6
19%
72 divided by 19
3.8
18%
72 divided by 18
4.0
17%
72 divided by 17
4.2
16%
72 divided by 16
4.5
15%
72 divided by 15
4.8
14%
72 divided by 14
5.1
13%
72 divided by 13
5.5
12%
72 divided by 12
6.0
11%
72 divided by 11
6.5
10%
72 divided by 10
7.2 9%
72 divided by 9
8.0 8%
72 divided by 8
9.0 7%
72 divided by 7
10.3 6%
72 divided by 6
12.0 5%
72 divided by 5
14.4 4%
72 divided by 4
18.0 3%
72 divided by 3
24.0 2%
72 divided by 2
36.0 1%
72 divided by 1
72.0
Review how it works...
How many years will it take to double your money IF you earn 3% interest? 7%
13%

6. Start saving young What happens when you earn compound interest?
Your principle AND your interest earned previously earn interest
What do you have to do to earn compound interest?
Leave the earnings in the account so they will earn interest too!
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7. Credit past = credit future
Your credit past is your credit future

8. Stay insured
How much will it cost you if something happens and you do NOT have insurance to cover it?
When is it a catastrophe?

9. Budget your money ID financial goals Prepare Balance Sheet
Prepare Income/Expense Statement
Analyze $ in/out
Prepare budget
Evaluate & revise
Create new budget

10. Don’t borrow what you can’t repay
“LIVE WITHIN YOUR MEANS”

11. Map your financial future
Students will summarize what they have learned by completing this sentence in their notebooks:
“Mapping your financial future is important because…..”
Discuss and compare sentence endings.

12. Don’t expect something for nothing
Is the deal “Too Good to be True”?
Watch out!

13. High returns equal high risks
Every person has to determine their personal “RISK TOLERANCE”
How much risk do you want to take with your $?

14. Know your take-home pay
Gross Pay = wages BEFORE deductions
Net Pay
= Take Home Pay

15. Compare interest rates
Use computer software to compare rates.
Compare rates at multiple financial institutions BEFORE signing loan contract!

16. Pay yourself first

17. Review Elements of Spending Plans
Income
money earned from wages, salaries, tips, withdrawals from savings and investments, interest earnings, scholarships, sales of properties, and gifts
Expenses
Fixed expenses---due by a specified date, often agreed upon in a contract; difficult to change in a short time
Flexible expenses---not due by a specified date; usually these are easier than fixed expenses to reduce or eliminate
Review Elements of Spending Plans
Income – Expenses= Net Gain/Net Loss
Net gain-when one has more income than expenses, the difference between the two
Net loss-when one has more expenses than income, the difference between the two

18. Smart financial goals Set SMART financial goals
link to SMART goal samples

19. Create a smart financial goal
Short term
Long term

20. Organize Determine format to use
Select categories for the spending plan
Allocate $ amounts to categories
Select a time period
Organize

21. Decide
Decide--Make realistic decisions and estimates for categories of spending.
If income is less than expenses, decide whether to earn more income, decrease expenses, or a combination of these.
Expenses
Income

22. implement Implement---put the spending plan into action
Pay bills &
shop online
Implement---put the spending plan into action
Note: Implement and control are to be done at the same time.
Save & plan ahead
for big ticket
purchases
Watch for sales &
Make your $ go further

23. Control
Control --Records kept as the spending plan is implemented reveal potential problems early, such as overspending in one category.
Use a computer or calculator to check records for accuracy.
Keep a credit spreadsheet to log all credit transactions, including both charges and payments.

24. Be in Control of your money
Be your own best ADVOCATE!
Know how much is your:
Net pay check
Loan balances
Monthly budget for a category of spending
Savings account
Investment account
Compare
Budget to actual
Adjust as needed
Plan
Set SMART goals
Long term
Short term
Save for big $ items
Research
Gather info on products and services you need

25. Where will lack of control get you?

26. Types of control systems
Envelope system
Spending plan
Computerized software
Check register system

27. evaluate Evaluate--- Determine if the spending plan process has worked
Compare estimated income and expenses to actual
Assess progress toward financial goals
Revise the spending plan (including financial goals) as needed and recycle to beginning of process