1. Unit 1 - Your Financial Plan:
Where It All Begins

2. “Most people don’t plan to fail… They simply fail to plan!”

3. What is Financial Planning
A blueprint or plan for managing all components of a person’s money.
Arranging to spend, save, and invest money to live comfortably, have financial security, and achieve goals.

4. Financial Planning is more than budgeting and investing.
Financial planning is a thinking process that helps achieve goals.

5. What are the components of a Financial Plan?
Goals
Net Worth Statement
Budget
Insurance Plan
Savings Plan
Investment Plan

6. Benefits of Having a Financial Plan—Which one(s) do you think is most important?
You have more money and financial security.
You know where to use money to achieve your goals.
You have less chance of going into debt you cannot handle.

7. The Five-Step Financial Planning Process
1-B

8. STEP 1
Set SMART Goals

9. "If you don't know where you are going, ANY ROAD will take you there."
Cheshire Cat, Alice In Wonderland

11. These are issues that will affect this step
WANTS VS. NEEDS
These are issues that will affect this step

12. Example of Wants and Needs
Food for breakfast
Clothes for school
Transportation to school or work
______________
WANTS
An iPOD
DVD Players
Cell Phone
Hot Car
______________
STOP! Stop the powerpoint and do the sitdown for wants and stand
Feed the Pig Clip
1-C

13. Needs vs. Wants Activity
Directions:
Stand up if this is a need for you.
Sit down if this is a want for you.
Clothing (basic)
Going to the movies
Going out to eat
Place to live (shelter)
A vehicle
A computer
An I-POD
Going to a basketball game
Food
Cell phone
Cable television
Designer clothing

14. Values
Values strongly influence our spending habits. We don’t usually spend our money on things we do not feel are important.

15. Examples of Values Getting a good education Religious faith or beliefs
Social causes
Handling money responsibly
Friendships/The people I hang out with
____________________________
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16. Term Goals Within three months Three months to a year More than a year
Incidental Goals
Stepping stones to short-term goals
SHORT-TERM GOALS
Within three months
INTERMEDIATE-TERM GOALS
Three months to a year
LONG-TERM GOALS
More than a year
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17. Instant vs. Delayed Gratification
Examples of Delayed Gratification
Saving money over time to make a major purchase.
Waiting to buy a new product until the price goes down.
Waiting to see the latest movie until the crowds get smaller and the lines shorter.
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18. S-M-A-R-T GOAL CRITERIA
Specific
Measurable
Attainable
Realistic
Time-Limited
1-G

19. STEP 2
Analyze Information

20. Cash Flow
A measure of the money you receive and the money you spend.

21. Spending Record $6.00 $35.00 $4.00 $7.00 $5.00 $8.00 $15.00 $15.00
$55.00
$40.00
$15.00
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22. STEP 3
Create a Plan (Decide)

23. Decision Making
The process of considering and analyzing information in order to make a decision.

24. Factors That Affect Decision Making
Age
Factors That Affect Decision Making
Needs
Wants
What about you?
Family
Culture
Time
Society
Motivation
Money
Values
Education
Habits
Attitudes
1-J

25. Opportunity Cost
Choosing one option may mean giving up altogether another goal. It’s a tradeoff!
Personal example: Concert vs. Algebra Test
Financial Example: $129 pair of shoes vs. saving

26. Decision-Making Process
Identify Your
Goal
Establish
Criteria
Examine Options
Weigh Pros
and Cons
Make a Decision
Evaluate
Results
1-K

27. STEP 4
Implement the Plan

28. REALITYRecognize that unless you strike it
rich somehow, you’ll have limited amounts of time and
money to use. That’s the Reality.
RESPONSIBILITYIf you handle your money
wisely, you can do a lot of good for yourself and others. On
the other hand, it’s your own fault if you blow it. That’s the
Responsibility.
RESTRAINTRemember the idea of delayed
gratification? You show Restraint when you have the
self-control to save your money for a future goal instead of
spending it now.
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29. SAVING
SPENDING
SHARING
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30. Monitor & Modify the Plan
STEP 5
Monitor & Modify the Plan

31. Monitor and Modify Are your existing goals still worth doing?
Is there a new goal to add to your list?
Is there an existing goal you want to drop or change?

32. Unit 1: Your Financial Plan:
Where it All Begins