Money Management What is financial planning?

Introduction  “Financial Independence”—What does it mean to you?  Work because you want to, not because you have to!

“Most people don’t plan to fail… They simply fail to plan!”  Financial Planning- What is it?  process of getting where you are today financially to where you want to be in the future  How do you get to where you want to be in the future financially?

Reaching Financial Independence

Financial Goals Values and Beliefs A value is a fundamental belief or practice about what is desirable, worthwhile, and important to an individual Family Good health Financial security A successful and/or satisfying career Honesty Helping others Religious commitment Education What are examples of values?  What influences our decisions?

Values Affect Decisions NEEDS  Food for breakfast  Clothes for school  Transportation to school or work WANTS  An iPOD  DVD Players  Cell Phone  Car  What else?  impulse buyer—know your spending habits  values and beliefs (handout)  Getting a good education  Religious faith or beliefs  Social causes  Handling money responsibly  Friendships / The people I hang out with  Values Auction  fefe

VALUES Values guide a person’s needs, wants, and goals Values, needs, wants, and goals influence a person’s daily decisions Decisions affect an individual’s financial situation

NEEDS vs. WANTS A need is something thought to be a necessity or essential items required for life Examples of needs: Food Water Shelter Examples of wants: Car stereo MP3 player Designer clothes A want is something unnecessary but desired or items which increase the quality of living

NEED OR WANT? YOU DECIDE! Clothing Going to the movies Going out to eat A place to live A car/truck A computer Owning an MP3 player Cell phone Owning a vacation home Food Everyone has different interpretations of needs and wants. This is based on… their personal values!

Getting “Wants” & Setting Goals  Delayed Gratification—What is it?  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.

Goal Setting  How many of you set goals for yourself?  How do we set financial goals?  determine wants and needs  must be written down, measurable, and realistic  SHORT-TERM GOALS  Within one year  Example?  LONG-TERM GOALS  More than a year  Example?

S-M-A-R-T GOAL CRITERIA S pecific M easurable T ime-Limited R ealistic A ttainable State exactly what is to be done Include how the goal can be measured Determine steps to reach the goal Do not set goals for something unrealistic State when the goal will be met

Smart Goals Goal“I want to buy a new iPod.” Goal “I want to buy a new iPod.” S pecific…….. M easurable… T ime-Limited.. R ealistic……. A ttainable….. I plan to save money for a new iPod. I plan to save $100 for a new iPod. I plan to save $100 for a new iPod by saving $20 from each babysitting job. I plan to save $100 for a new iPod by saving $20 from each babysitting job and putting it into a savings account. I plan to save $100 in 3 months for a new iPod by saving $20 from each babysitting job and putting it into a savings account.

Review  Financial planning – important  Financial independence – what is it?  Time Value of Money  Financial goals – pathway  Influences goals – values and spending  SMART goals?  Assignment: set 2 financial SMART goals  Short-term & Long-term