1. Planning Your Financial Future: It Begins Here
Chapter 1

2. Financial Planning
Financial plan- is a set of goals for acquiring, saving, and spending money
Do you want to just get by living pay check to paychek or do you want to be free from financial worry?
Having a financial plan helps you be in control of your financial situation and achieve your goals.
Why is financial planning important?
Financial Goals- measurable objectives related to acquiring or spending money
You may have to give up things you want now in order to be financially secure later
Set short term and long term goals, they will help you achieve many things in the future

3. SMART Goals S- Are my short and long term goals Specific
M-Are my goals measurable
A-Are my goals attainable
R- Are my goals relevant to meeting my financial needs
T- Are my goals timely

4. Needs and Wants
Needs- those things a person must have to survive, such as food, water, shelter, and clothing
Wants- things a person desires but are not necessary
Values-are your beliefs about ideas and principles that are important to you
Wealth- is a plentiful supply of money or valuable goods
Net Worth- is the difference between what you own and what you owe

5. Assets-things you own
Liabilities- (debts you owe) from the assets
Assets-Liabilities=Net Worth
Assets-$1785
Liabilites-$968
Net Worth=$817

6. Investing- is putting money in a savings account, buying savings bonds, or buying part ownership in a company
Financial independence- having enough money for your basic needs and modest wants without having to work
Growth-increase in value, of their investments over a period of years
Invest $2000 for 10 years at 19, grows at 10% rate per year. You stop at 65 years old, you’ll have $1,083,959

7. Example:
Annual investment for 10 years = $2,000
Investment Period= 48years
Annual Earnings rate = 10%
Total Investment = $20,000
Final Amount = $1,083,959

8. The average rate of return- the percentage that your savings or other investments earn over a period of time
Average return amount= total amount earned / # of years
Average rate of return = average return amount / # of years
No guaranteed rate of return on most types of investments, return on stocks & interest rates go up and down

10. Interest- a fee paid on borrowed money or money earned on deposit with a bank or other financial institution
The longer you keep money on deposit the more you will earn
Compound interest- on the principal(amount invested) plus the interest you have already earned
Deposit $1000 interest rate of 5% you will have $1050, next year you will earn $1050
Principal x Rate x Time = Interest

11. Do Example 1-3 in the book
Do Example 1-4 in the book

12. Rule 72- is an equation that lets you estimate how long it will take to double your investment with a fixed annual interest rate
72 / Interest Rate= # of years to double an investment
Rate of return of 6% How many years will it take you to double your investment?
72 / 6(ror) = 12
So it will take 12 years