1. Financial Planning Essential Questions
How can one achieve financial security?
Why is it important to have a financial plan?
What is the most important factor when choosing a career?
Goals, values, opportunity cost, liquidity, interest, inflation, career, job networking, standard of living

2. Objectives Create a financial plan Set SMART goals
Analyze economic factors & market forces
Evaluate decisions and opportunity costs

3. Financial Planning
Arranging to spend, save, and invest money to live comfortably, have financial security, and achieve goals.

4. Need or Want?? Hold up a… 2 for Want 1 for Need Steak Cell Phone Pants
Need: basic things we need to survive
Want: can live without, but make life fun
Hold up a…
1 for Need
2 for Want
Steak
Cell Phone
Pants
Food
Car
1-C

5. Values & Goals Value: Fundamental belief or practice about what
is desirable and important to an individual
(Education, charity, social status & money)
Goal: Something you aim for
Provide direction
Focus on the important things
Keep the end result in mind
B&PF: p.7

6. Goals
Goal – the end result of something a person intends to acquire, achieve, do, reach, or accomplish sometime in the near or distant future
Financial goals – specific objectives to be accomplished through financial planning
Education goals - enable individuals to prepare for future success in the workplace
B&PF: p.6
SHORT-TERM GOALS: 1 year or less
INTERMEDIATE-TERM GOALS: 1-5 years
LONG-TERM GOALS: Over 5 years
B&PF: p.10

7. SMART Goals SMART Goals Specific State exactly what is to be done
Measurable
Include how the goal can be measured
Attainable
Determine steps to reach the goal
Realistic
Do not set goals for something unrealistic
Time Bound
State when the goal will be met

8. Making Decisions Routine vs. Major Decisions
Opportunity Cost: The value of what is given up when
you choose 1 option over another. The next best alternative
Why is it important to have a plan?
What influences your values?
What is your opportunity cost of taking personal finance?

9. Goods and Services
Good: A physical item that is produced and can be weighed or measured. Consumable Goods: Buy often & use up quickly -(Milk/bread) Durable Goods: Long lasting, bought on occasion -(Car ) Service: A task done by a person/machine -(Haircut)
B&PF: p. 11
1-C

10. Market Forces Supply: availability of a good/service
Demand: desire to have a good/service
Great demand & low supply = price increase
Limited demand & high supply = price decrease

11. Economic Factors Interest: Cost of borrowing money
Inflation: Increase in price of goods & services
Liquidity: The ability to convert a financial resource to cash while maintaining value

12. Risks of Financial Planning
1. Income Risk: Risk of losing your source of income (job)
2. Personal Risk: Not wearing your seatbelt
3. Liquidity Risk: The chance that an investor will have difficulty converting a financial resource to cash.

13. Risks of Financial Planning
4. Inflation Risk: Inflation may exceed return on investment or increase cost of goods/services more than earnings 5. Interest Rate Risk: The risk of interest rates changing which affect the cost of borrowing

14. Time Value of Money How much money we have in the future depends on:
1. how much we have right now (present value / principal)
2. how much we are making (interest rate, R.O.R)
3. how much time we are saving/investing for (years)
Time Value of Money Video
1-C

15. Achieving Your Financial Goals
1. Obtain : (Resources by working & investing) 2. Plan: (Set financial goals to achieve security) 3. Spend: (Less than you earn) 4. Save: (P.Y.F & save for emergencies) 5. Borrow: (Wisely, credit cards & loans) 6. Invest: (to increase wealth) 7. Manage Risk: (Protect resources) 8. Retire: (Collect retirement)