1. Getting your personal Finances In Order

2. Personal Financial Planning
Personal Finance
Is everything in your life that involves money
Personal Financial Planning
Is arranging to spend, save, and invest money to live comfortably, have financial security and achieve goals.

3. Goals These are things that you wish to accomplish Personal Goals
Professional Goals
Financial Goals

4. Financial Planning Process
4 steps to the process
Determine your current financial situation
Make a list of your finances
Savings
Monthly Income (Job earnings, allowance, gifts)
Monthly Expense (money you spend)
Debts (money you owe other people)

5. Step 2 Develop your Financial Goals How do you spend money?
Is it more important to spend money now or save for the future
Would you rather get a job or continue your education
What are your VALUES
The beliefs and principles you consider important, correct, and desirable.

6. Needs Vs. Wants Need Want
Is something you must have to survive, such as food, shelter and clothing.
Want
Is something you desire or would like to have or do.

7. Step 3 Identify Your Options Expand your current situation
Change the current situation
Start something new
Continue the same course of action.

8. Step 4 Step 4 – Evaluate Your Alternatives
Sources of Financial Information
Consequences of Choices
Opportunity Cost
In making a choice a trade-off is what is given up when making one choice instead of another.
Understanding Risk
Inflation – Price may increase on a car
Interest Rate – Interest rates may go up on car loans
Income – Lose your job- may decrease
Personal – Is the risk of you buying this product worth the overall situation.
Liquidity – How quickly can it be converted to Cash

9. Your spending Profile
With a partner discuss the possibilities of spending a found $500

10. Types of Financial Goals
Time Frame of Goals
Short-Term Goals
Take one year of less to achieve
Intermediate Goals
Takes two to five years to achieve
Long-Term Goals
Takes more than 5 years to complete

11. Goals for different needs
Service
A task that a person or a machine performs for you.
Good
A physical item that is produced and can be weighed or measured.
Consumable goods – soda pop
Durable goods – car
Intangible goods - education

12. Influences on Personal Financial Planning
Three things that influence personal planning
Life Situations
Personal Values
Economic Factors

13. Life Situations Going to College instead of work Starting a new career
Getting Married
Having Children
Moving to a new city

14. Economic Factors Economics
Is the study of the decisions that go into making, distributing, and using goods and services.
ECONOMY
Consists of the ways in which people make, distribute, and use their goods and services.
Market Forces
Financial institutions
Global influences
Economic Conditions

15. Supply Demand The amount of goods and services available for sale
Is the amount of goods and services people are willing to buy.

16. Supply V Demand

17. Financial Institutions
Banks
Credit Unions
Savings
Insurance companies
Investment companies
These institutions guide the market
The Federal Reserve

18. The Federal Reserve
Is the Central banking organization of the United States. Its primary role in the U.S. economy is the regulation of the money supply.
Controls interest rates

19. Economic Conditions
Consumer Prices
Consumer Spending
Interest Rates

20. Consumer Prices
Over time prices of items increase. This rise in price for goods and services is called INFLATION

21. Consumer Spending A person who purchases and uses goods and services.
Affects the economy by helping create and maintain jobs.
Higher Rate of employment
People have more money to spend
Vica Versa when employment is low

22. Interest Rates
Like everything else, money has a price. That price is called interest.
The price that is paid for using some else's money.
When consumers increase their saving and investments, the supply of money that is available for others to borrow grows, and interest rates go down. When consumers borrow ore money, the demand for money increases and interest rates go up.
We will discuss this more in upcoming chapters