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UNIT 1: FINANCIAL PLAN NEFE High School Financial Planning Program.

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Presentation on theme: "UNIT 1: FINANCIAL PLAN NEFE High School Financial Planning Program."— Presentation transcript:

1 UNIT 1: FINANCIAL PLAN NEFE High School Financial Planning Program

2 Most people dont plan to fail… They simply fail to plan!

3 Wants Have your parents ever refused to buy you some things you really wanted? New clothes Tickets to a show Latest electronics Maybe you just didnt have enough money to buy these items yourself

4 Sample Wants and Needs NEEDS Food for breakfast Food for breakfast Clothes for school Clothes for school Transportation to school or work Transportation to school or work A place to live A place to live ______________ ______________ WANTS An iPod An iPod Video game Video game Cell phone Cell phone Hot car Hot car A mansion A mansion ______________ ______________

5 What Are Your Goals? 1. Make a list of all the goals you have for yourself – you have one minute 2. Narrow this list down to six goals – you have 45 seconds 3. Now pick your top three goals – you have 20 seconds 4. Last time, pick your number one, top goal – you have 10 seconds

6 Financial Planning A process of: Setting goals Developing a plan to achieve your goals Putting the plan in action Creating a roadmap for everything you do with your money Spending Saving Using Credit Investing

7 Purpose of Financial Planning To live comfortably Buy things without getting stressed out Things that you need Things that you want

8 5 Steps of Financial Planning Set SMART Goals S pecific Provide the details M easurable Put a price on it A ttainable Within reach R ealistic Practical T ime Bound Clear time frame Analyze information Create a plan Implement the plan Monitor and modify the plan

9 Two Teen Millionaires Meet Cameron and Ashley Two teens who set goals and made millions

10 Step 1: Set SMART Financial Goals Begin with an end in mind Visualize a picture of your desired outcome Set priorities in order to make good choices Should be meaningful Write them down Consider needs and wants Needs Basic things that we must have to survive Wants Things that make life more fun Can live without them

11 SMART Goals Are your goals SMART? Realistic I want to be a millionaire in two years I want to lose ten pounds in a week Attainable Are these two goals attainable? Can we reach these goals during our time frame?

12 Examples of SMART Goals S - Specific I want to go to Bermuda on vacation this summer M – Measurable I will need a total of $2,400 A – Attainable I will need to save $400 a month for six months R – Realistic List how you can do this I will cut back on going out to eat for lunch I wont go to the movies I will save my birthday money I will only buy gifts for my friends that are on sale

13 Examples of SMART Goals (continued) R – NOT Realistic I will save my entire paycheck each week This means you will not pay your cellphone bill, your car insurance and you wont buy gas for your car This is NOT realistic Your plan needs to be Realistic if it isnt you wont reach your goal T – Time I will need to save by July 2012 in order to plan for an August 1 st trip

14 Step 1: Set SMART Financial Goals (Continued) Needs and Wants are affected by your Values Beliefs and practices in your life that are very important to you Influenced by many factors such as family, friends, your way of life, education, and life experiences Goal Something that you aim for in your life and gives you directionset financial goals Time frames for goals: Short-term: accomplish within 3 months Intermediate: accomplish within 3 months to 1 year Long-term: take longer than 1 year to accomplish Delayed Gratification Giving up something now to get something better later

15 Step 2: Analyze Your Information Take a look at your Cash Flow Amount you receive or earn Money you get from allowance, a part-time job, a gift, etc. Amount you are spending Amount you are saving Common dilemma Need to save more than you receive or earn

16 Step 3: Create a Plan (Your Financial Roadmap) Items that can affect your spending Spending log Values Habits Opinions of family and friends Online activity Advertisements

17 Are you an Oscar or a Felix? It is said that we have both an Oscar and a Felix living inside our brains. Oscar, similar to the Oscar in The Odd Couple, is unstructured, reactive, driven by whims, and lives by the credo, rules are made to be broken. Felix, on the other hand, loves lists, sets goals, and plans everything he does. He lives by the clock and never deviates from his rules. When it comes to working with numbers, who rules your brain Oscar or Felix? Why?

18 Step 3: Create a Plan (Continued) (Your Financial Roadmap) Six Steps in the Decision Making Process Identify your Goal Establish Criteria (helps to eliminate choices) What? When? How much are you willing to spend? Examine your Options Brands, features, capabilities Weigh the Pros & Cons Match your options with your criteria Make your Decision Which option best meets your criteria? Evaluate Results Analyze and reflect

19 Key Terms Related to the Decision Making Process Opportunity Cost The value of what is given up when you select one option over another option Satellite Decisions Smaller decisions that can result from a major decision

20 Step 4: Implement the Plan Be a responsible spender Accountable for your decisions and actions Guidelines for sticking with your plan Write your goals on an index card Post the card somewhere visible Discuss your goals with someone Prior to making a purchase, decide how much you are going to spend in advance so you do not spend more

21 Step 5: Monitor and Modify the Plan Monitor your plan once or twice per month to stay on track Make any necessary adjustments Unexpected instances or expenses Change in goals Resources change Life changes

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