1. Chapter 1 Personal Financial Planning
Personal Finance
Chapter 1
Personal Financial Planning

2. Quick Question
Does Money = Happiness?

3. Opening Number
$8,000
Average College Graduate leaves school with at least $8,000 of debt, other than student loans

4. Objectives
Discover how to create a financial plan

5. Motivation Question
Think about the financial goals you might set during this school year. What are they?
How do you think you will be able to achieve these goals?

6. Personal Financial Planning
Spending, Saving, and Investing your money so you can have the kind of life you want

7. Benefits of a Plan More money- know how to use it
Less chance of going into debt
Help your partner and support children

8. If someone gave you $200, what would you do with it
If someone gave you $200, what would you do with it? Pick three of the options below
Take out friends to eat and to the movies (5 Pts)
Spend $50 and save the rest (3 Pts)
Save the money to make your next car payment (1 Pt)
Buy school clothes (3 Pts)
Buy some new CDs (5 Pts)
Buy an Ipod (3 Pts)
Get a cell phone (5 Pts)
Buy a savings bond (1 Pt)
Put the money in a savings account for college ( 1 Pt)
Buy the hottest new concert tickets (5 Pts)

9. What do your choices say about you?
Big Saver: If you scored 3-5, you’re willing to give up things today so you can buy something you want more tomorrow
Middle of the Roader: If you scored 7-11, you know how to use your money for current needs while keeping an eye on the future
Big Spender: If you scored 13-15, wow, do you like to spend money!

10. Financial Plan Steps (6)

11. 1: Determine Your Current Financial Situation
Make a list of your savings, monthly income, allowances, monthly expenses and debts

12. 2: Develop Your Financial Goals
What is your personal attitude towards money?
Importance of saving for future, job after high school, go to college, etc…

13. 3: Identify Alternative Courses of Action
What changes could you make?
Continue same course, or choose something different
Examples?

14. 4: Evaluate Your Alternatives
Sources of financial information
What are some sources?
Opportunity Cost: The price of what you give up
Example of Opportunity Cost?
Risk

15. 5: Create and Use Your Plan
Follow your plan

16. 6: Review and Revise As you get older, things change Goals Change
Wants and Needs Change

17. Liquidity
The ability to easily convert your financial resources into cash without a loss in value

18. Service vs. Good
Service: a task that a person or a machine performs for you
Good: a physical object that is produced & can be weighed or measured

19. Timing of Goals Short Term: 1 year or less Intermediate: 2-5 Years
Long term: more than 5 years
Examples of each?

20. Guidelines For Goals S.M.A.R.T. Specific Measureable Attainable
Realistic
Time-Bound

21. Class Work
Develop 1 personal financial SMART goal and share with the class
Make sure it means all of the criteria to be SMART

22. Economics
The study of the decisions that go into making, distributing, and using goods & services

23. Supply vs. Demand
Supply: the amount of goods & services available for sale
Demand: the amount of goods & services people are willing to buy

24. Federal Reserve System
The central banking organization of the United States
Primary role is the regulation of the money supply

25. Inflation
The general rise in the level of prices for goods & services over time

26. Consumer
A person who purchases & uses goods or services

27. Interest
The price that is paid for the use of another’s money

28. Closing
Complete the following statement: “If I learn & put into action the six steps in the financial planning process, I will…”
Example: “…have a solid foundation for making all my financial decisions, now and in the future.”
Be prepared to discuss your answer

29. Assignment Page 19 in Textbook #1-4; #6
Hand in at the end of the period