1. Daily Information Objectives: Prepare a personal cash flow statement and a net worth statement. Apply a decision- making process to personal financial choices. Warm Up: On a piece of paper, describe the difference between… instant gratification vs. future gratification Agenda: 1.Complete warm-up 2.Define vocabulary 3.Cash Flow and Net Worth P.P. 4.Student activity 5.Bottom Line

2. Resources Limit Choices Unlimited Wants/Needs + Limited Financial Resources = Financial Choices

3. Remember…. Businesses create demand by advertising Don’t be tempted to buy products you can not afford Evaluate your financial situation through cash flow statements and net worth statements.

4. Cash Flow Statement April 1-30, 2012 Cash Inflows (Income) Work (part-time)$120.00 Allowance for household chores40.00 Lunch money allowance60.00 Savings account interest2.00 Total cash inflows$222.00 Cash Outflows (Expenses) Gifts$20.00 Clothes and shoes60.00 Loan payment to parents20.00 Lunches60.00 Entertainment/miscellaneous40.00 Total cash outflows200.00 Net cash flow$22.00

5. Slide 5 4-1 Resources and Choices PERSONAL NET WORTH STATEMENT Assets (items of value)Liabilities (debt) Cash and checking account$ 452.56Car loan$1,100.00 Savings account500.00Credit card debt 200.98 Savings bond300.00Total liabilities$1,300.98 Baseball card collection 100.00 Computer, iPod, games 300.00 Car, current value 3,000.00Net Worth Total assets$4,652.56Assets minus liabilities 3,351.58 Total liabilities and net worth$4,652.56 Net Worth

6. Decision-Making Process 1.Define the need. 2.List options for meeting the need. 3.Compare the options. o Consider the opportunity cost—the value of your next best option. 4.Make a decision. 5.Take action based on your decision. 6.Reevaluate your choice.

7. Financial Strategies Consider your future If you have doubt, don’t buy it Avoid buyer’s remorse (impulse buys)

8. Individual Activity Based on the information provided in the handout, create a cash flow statement and a net worth statement for Andrea McCall

9. Daily Information Objectives: Identify the purpose of and prepare a budget. Describe recordkeeping methods used in the budgeting process. Warm Up: What is philanthropy? Agenda: 1.Complete warm-up 2.Philanthropy video 3.Define vocabulary 4.Budgeting P.P. 5.Student budgeting activity 6.Bottom Line

10. What does it mean to Budget? Manage your money Plan how to spend or save it Present vs. future Based on estimated income and expenses Use spreadsheets to prepare

11. How Do You Prepare a Budget? Step 1: Analyze your spending for one month (where does your money go?) Step 2: Create a spreadsheet based on spending habits Step 3: Designate money to specific categories (how much is needed?): o Variable expenses o Fixed expenses o Charitable giving Step 4: Balance the budget (adjust if necessary)

12. Be Sure to Pay Yourself First! Before designating money in different categories, take a fixed amount for yourself and put it in your savings account. Remember, a little goes a long way! Amount SavedInterest Earned10 Year Future Value $7.005%$4,720 $21.005%$14,160 $35.005%$23,600

13. 70-20-10 Strategy Spend 70% of your income Save 20% of your income Invest 10% of your income

14. Budget Analysis Make sure every dollar has a name on paper before you receive it! Not everything will go as planned –Especially the first couple of months Variances will occur –Difference between planned and actual

15. Record Keeping Manual –Pen and paper –Keep it somewhere safe Electronic –Using software such as Quicken –Microsoft Excel (encrypt) –Google Docs

16. Personal Budget IncomeWeeklyMonthlyYearly Work (part-time)$30.00$120.00$1,440.00 Allowance for household chores 10.0040.00480.00 Lunch money allowance15.0060.00720.00 Savings account interest.50 2.00 24.00 Total income $55.50$222.00$2,664.00 Savings Deposit to savings account$ 5.50$ 22.00 $ 264.00 Expenses Gifts$ 5.00$ 20.00$ 240.00 Clothes and shoes15.0060.00720.00 Loan payment to parents5.0020.00240.00 Lunches15.0060.00720.00 Entertainment/miscellaneous 10.00 40.00 480.00 Total expenses$50.00$200.00$2,400.00 Total savings and expenses $55.50 $222.00$2,664.00

17. Budgeting Activity Read through the directions on the handout and complete.

18. Daily Information Objectives: Explain the purpose an steps in financial planning. Describe ways you can protect your financial resources. Warm Up: Read the handout about SMART goals. Agenda: 1.Complete warm-up 2.Socratic seminar on article 3.Financial Planning P.P. 4.Marshmallow activity 5.Bottom Line

19. Socratic Seminar Activity I will read a goal out loud. Determine if it is a short-term or long-term goal and move to the appropriate side of the room. Short-Term Long-Term

20. Financial Planning The process of looking at your current financial situation and thinking about your future. Includes personal and financial goals along with steps and a timeline for completing them. Make sure to review and update your financial plan periodically.

21. Steps for Financial Planning Step 1: Gather financial information –Look at all financial records Step 2: Analyze information –Make sure nothing is missing –Is your income covering your expenses? Step 3: Set Goals –Personal and financial –Short and long term

22. Steps for Financial Planning Step 4: Develop a timeline –Goals should be measurable Step 5: Implement the plan –Work towards achieving your goals –Check progress vs. timeline

23. Financial Plan (One Goal) FINANCIAL PLAN Net worth on April 1, 20--: $525.56 Personal GoalFinancial GoalSteps to Take (Benchmarks)Timeline Live in my own house in the country. Buy a house in the country. 1.Save money for a down payment ($12,000) 5 years Set aside $200 per monthOnce per month Open a separate account for money saved November 6 (next week) Talk to a mortgage broker to get prepared Make an appointment for November 9 2.Get a job that provides enough income to make monthly payments 2 years

24. Where Can You Get Good Financial Advice? Financial planners Financial experts Newspapers and magazines Seminars and workshops Financial websites

25. How Can You Protect Financial Resources? Deal only with financial advisers you know and trust Keep good records Verify account balances regularly Guard passwords Be aware of phishing Guard against identity theft

26. Marshmallow Activity Supplies: A pinch of toothpicks and a handful of small marshmallows Task: Create a free standing tower using your supplies But…Before you build, work as a team to write down a GOAL to serve as your road map. Be prepared to share this with the class. Ready-Set-Build!

27. Create a personal goal Remember to be… Specific Measurable Attainable Realistic Time Bound