Bell Work What do you think Personal Finance is? Get a dry erase board and write your name on it. (They are on the table in the front of the class.) Take out a sheet of paper and answer the following: What do you think Personal Finance is?

Collage Activity Find 6 pictures in magazines or online of your future goals. They can be short term, intermediate, or long term goals. Paste the pictures to your paper and give me a description of what your goal is and why it is your goal.

Bell Work 10/11 On the same sheet of paper as yesterday answer the following question: Why do you think it is important (as a high school student) to start saving your money now?

Chapter 1 Vocab. Cards For each vocabulary word highlighted in Chapter one, write the word and the definition and draw a picture that will help you remember the word. Key terms on page 6 and page 19

Bell Work 11/12 What is the biggest goal that you want to accomplish this year and why?

Writing Activity On a sheet of paper, write a description of the life that you expect to have as an adult. Include: where you will live, what kind of work you will do, if you expect to have a family, if you want to travel and where, and what kind of car you would like to own. How do you expect to achieve these goals?

Chapter 1 Personal Financial Planning

Section 1.1: Financial Decisions & Goals Objectives Define personal financial planning. Name the six steps of financial planning. Identify factors that affect personal financial decisions.

Personal Financial Decisions Personal Financial Planning is arranging to spend, save, and invest money to live comfortably, have financial security, and achieve goals. Goals are the things you want to accomplish.

Benefits of Planning Benefits of planning: You have more money and financial security. You know how to use money to achieve your goals. You have less chance of going into debt you cannot handle. You can help your partner and support your children if you have a family.

Six Steps of Financial Planning

Step 1: Determine Your Current Financial Situation To figure out your current financial situation, make a list of items that relate to your finances: Savings Monthly income Monthly expenses debts

Step 2: Develop Your Financial Goals Values are the beliefs and principles you consider important, correct, and desirable. Needs vs. Wants A need is something you must have to survive. Ex. Food, shelter, and clothing A want is something you desire or would like to have or do.

Needs vs Wants Video https://www.youtube.com/watch?v=xhR4VtfgN WU&list=PL2bKpf_mrVixIS1f87P30RlSGtMvFhG1I Make a short list of the needs vs wants in this video. (Hint: Wants will be longer than needs)

Step 3: Identify Your Options Example: if you are saving $50.00 a month, you might have these options: Expanding the current situation. Increase the savings to $60.00 a month. Change the current situation. Investing in stocks instead of putting it in a savings account. Start something new. You could use the $50.00 to pay off debt. Continue the same course of action. You may choose not to do anything.

Step 4: Evaluate Your Alternatives Sources of financial information Important to keep up-to-date with social and economic conditions because they can affect your current financial situation. Consequences of choices Opportunity Cost or (trade off) is what is given up when making one choice instead of another. Ex. The opportunity cost of going to college would be the benefit of having a full time job.

Opportunity Cost Video https://www.youtube.com/watch?v=8QLkh msvKLo

Step 4: Evaluate Your Alternatives Understanding risks Inflation Risk if you wait to buy a car until next year, you accept the possibility that the price may increase. Interest Rate Risk interest rates go up or down, which may affect the cost of borrowing or the profits you earn when you save or invest. Income Risk You may loose your job due to unexpected health problems, family problems, an accident, or changes in your field of work. Personal Risk Driving vs flying somewhere. Liquidity Risk Liquidity is the ability to easily convert financial assets into cash without loss in value. Some long-term investments, such as a house, can be difficult to convert quickly.

Step 5: Create & Use Your Financial Plan of Action A plan of action is a list of ways to achieve your financial goals.

Step 6: Review & Revise Your Plan Financial planning continues as you follow your plan. As you get older, your finances will need to change.

Types of Financial Goals 2 factors influence your planning for financial goals: the time in which you would like to achieve your goal and the type of financial need that inspires your goals. Time Frame of Goals: Short-term goals: takes one year or less to achieve. Intermediate goals: take two to five years to achieve. Long-term goals: take more than five years to achieve.

Goals Videos https://www.youtube.com/watch?v=5eI5J vTGzAI

Goals for Different Needs A Service is a task that a person or a machine does for you. Haircut, mail delivery, car repairs, teaching, medical checkups. A good is a physical item that is produced and can be weighed or measured. Consumable goods- purchases that you make often and use up quickly. (food) Durable goods- expensive items that you do not purchase often. (cars) Intangible items- cannot be touched but are often to your well-being and happiness. Health, education, music, and free time.

Guidelines for Setting Goals Your financial goals should: Be realistic Be Specific Have a clear time frame Should help you decide what type of action to take.

Influences on Personal Financial Planning Life Situations & Personal Values Economic Factors Economics is the study of the decisions that go into making, distributing, and using goods and services. The economy consists of the ways in which people make, distribute, and use their goods and services. Supply is the amount of goods and services available for sale. Demand is the amount of goods and services people are willing to buy. The Federal Reserve System (The Fed) is the central banking organization of the United States. Inflation is when there is a rise in the level of prices for goods and services. Consumer is a person who purchases and uses goods or services. Interest is the price that is paid for the use of another’s money.

Supply and Demand Video https://www.youtube.com/watch?v=g9aDi zJpd_s

Assignment Grab a personal finance book and turn to page 18 and do number 6. You can do this with a partner if you would like.

Page 18 #6 Facts: drive across country, 6 month time frame to save, they have to drive from Albuquerque to Los Angeles. Step 1: they make $97 a week each Step 2: Need at least $500 each for the trip in 6 months. Step 3: If they have 6 months=24 weeks x $97= $2,328 in 6 months $25.00 a week x 24 weeks= $600.00  That leaves them with $72 a week each. Expand: maybe save more a week for unforeseen expenses Change: I wouldn’t invest since it is a short time period, what happens if you loose your money? Step 4: if you wait to buy a plane ticket the prices may go up, if you wait to go on your trip then the price of gas may go up. What if you loose your job, what would be your plan of action? Step 5: Come up with your final plan. Step 6: Every month I would look over my plan and save more if I could.

Practice Problem Emily and Kennedy want to go on a cruise that is one year away. The cruise cost is $650 per person. Emily and Kennedy each make $200.00 a week at their part time job. Each of them owe $400.00 a month in rent. Develop them a plan by using the six steps of financial planning.

Section 1.2 Opportunity Costs & Strategies Objectives Explain opportunity costs associated with personal financial decisions. Identify eight strategies for achieving financial goals at different stages of life.

Financial Opportunity Costs Time Value of Money is the increase of an amount of money due to earned interest or dividends. Ex. You want a new pair of shoes that cost $129. You can either buy the shoes now or invest the money and earn interest and dividends on that money. Principal is the original amount of money on deposit. For a loan, the principal is the amount that you borrow. Future Value is the amount your original deposit will be worth in the future based on earning a specific interest rate over a specific time period. Future value computations are also called compounding.

Financial Opportunity Costs A Annuity is a series of equal regular deposits. Present Value is the amount of money you would need to deposit now in order to have a desired amount of money in the future.

Achieving Your Financial Goals Obtain- obtain financial resources by working, making investments, or owning property. Plan- the key to achieving your financial goals. Spend Wisely- many people buy things they cannot afford. Don’t waste your money! Save- If you save on a regular basis, you will have money to pay your bills, make major purchases, and cope with emergencies. Borrow Wisely- only borrow when necessary. Invest- people invest for two main reasons: to increase their current income and to achieve long-term growth. Manage Risk- protect your resources in the event of sickness or death. Plan For Retirement- you should keep in mind what age you want to retire and the lifestyle you want to have when you retire.