1. Goal Setting

2. Financial Goals A statement of something a person needs or wants to do related to finances/money

3. SMART GOALS

4. S- Specific Need to have a definite end Non-example: I want to save more money. Example: I want to have $100 in my savings account.

5. M- Measurable Need to have a way to tell if progress has been made Non-example: I want to be a better student. Example: I want to improve my GPA by.2 points.

6. A- Action-oriented Need to use action words to describe Non-example: I want to be employed. Example: I want to apply for jobs.

7. R- Realistic Need to be able to be reached Non-example: I want to earn $1 million by Christmas. Example: I want to earn $500 working a seasonal job by Christmas.

8. T- Timely Goals should be achievable in a reasonable amount of time Non-example: I want to be a millionaire some day. Example: I want to save up enough money for my first year of college by the end of the school year.

9. TIME FRAMES

10. Short-term Goals that can be accomplished in a few hours or days Example: Earning an “A” on a test.

11. Intermediate-term Goals that can be accomplished in one to six months Example: Achieving a 4.0 for the semester

12. Long-term Goals that are accomplished in six or more months Example: Graduating from high school

13. WHAT KIND OF GOAL?

14. Intermediate-term Save up $100 to buy a new bike in the next two months.

15. Short-term Be on time to your next class.

16. Long-term Save enough for retirement to live off the interest.

17. Intermediate-term Passing all your classes at mid- terms

18. Intermediate-term Find a job in the next month.

19. Long-term Save the money to take a family vacation to DisneyWorld

20. Intermediate-term Prepare a rough draft of a 10-page research paper.

21. Long-term Entering the career of your choice.

22. Short-term Beat a stage or level on a video game.

23. Short-term Read a book over the weekend

24. Long-term Read 15 books this year

25. Long-term Graduating from college with a degree in nuclear engineering

26. Short-term Do your homework for tomorrow

27. Short-term Save your change from today in your piggy bank

28. Intermediate-term Save $20 a week until Hanukkah

29. WHY WE MAKE OUR FINANCIAL DECISIONS

30. Reasons People Buy Things They Need It They Want It Advertising/Marketing Peer Pressure Emotional Shopping

31. SO HOW DO WE KNOW WHAT TO BUY? Decision making- The process of considering and analyzing information in order to make a choice.

32. Economic Concept Scarcity- the conflict that arises because people have unlimited wants and limited resources Which means? We can’t have everything we want Opportunity Cost- the highest valued alternative one must give up to pursue a decision

33. Needs Goods that are necessary to live Ex: Food, water, shelter, transportation Wants Supplementary goods that might improve quality of life Ex: fancy car, brand name clothing, new iPod

34. Values The beliefs and principles a person considers important, correct, and desirable. What do you value?

35. ADVERTISING

36. Why It Works Helps consumers become aware of your product Example:

37. Why It Works Uses suggestion- a psychological concept involving association of two ideas Appeals to emotion Example: Have a celebrity endorse a product. If you like the celebrity, you have good feelings toward the product.

38. Why It Works Uses repetition to help consumers remember the product Example: Geico can help you do what?

39. Why It Works Plays on societal trends in order to target the appropriate audience Example: Michael Phelps sponsoring products right after he won gold medals in Beijing.

40. EXAMPLES OF ADVERTISING

43. Sketcher’s Ad from last superbowl

44. CONSEQUENCES

45. Possible Consequences of Emotional Buying (Instant Gratification) Pros You get what you want Immediate gratification Cons Excessive debt Less money for needs More worry about how to pay for things Impulse buying Bankruptcy(?)

46. Possible Consequences of Financial Planning (Delayed Gratification) Pros Security Ability to afford needs Ability to achieve goals Less worry Cons Delayed gratification Lifestyle change (?)

47. Bankruptcy Legal inability to pay debts Chapter 7- Liquidation- works to eliminate (wipe off the record) existing debt by getting rid of all assets Chapter 13- Reorganization- court approves a repayment plan that does not require the person to give up their assets as long as they have steady income

48. Why it’s not good Harder to get loans after filing for bankruptcy Interest rates are much higher on loans Some debt cannot be eliminated through bankruptcy (i.e. back taxes, alimony, student loans, child support, and debts incurred through fraud)

49. CREATING A FINANCIAL PLAN A blueprint or plan for managing all aspects of a person’s money.

50. Steps 1.Determine the current financial situation 2.Develop financial goals 3.Identify all options 4.Evaluate alternatives 5.Create and use a financial plan of action 6.Review and revise the plan

51. Example- Identify the steps Greg currently has $100 in his checking account. He works a part-time job and makes about $100 a week. He is trying to save up to go on trip to Europe this summer that costs $2000, but he is not very good at financial planning. What are some possible options? Which option should he choose? How would he implement this plan? How might the plan change?