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Unit 1 - Your Financial Plan:

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Presentation on theme: "Unit 1 - Your Financial Plan:"— Presentation transcript:

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

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 ____________________________ 1-D

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 1-E

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. 1-F

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 1-I

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. 1-N


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

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