Objective: Explore how spending, saving, and values impact your finances.

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-Delayed Gratification -Cash Flow -Decision Making -Opportunity Cost **Define each in your own words. -Financial planning -Needs -Wants -Values -Goals -Delayed Gratification -Cash Flow -Decision Making -Opportunity Cost

“Plan your work; work your plan.” Financial Planning “Plan your work; work your plan.” Financial planning is the process of defining goals, developing a plan to achieve them, and putting the plan into action. It includes spending, credit, saving, and investing.

Why plan? **Planning well will enable you to afford nice cars, comfortable homes, fun vacations, and many extras in life. *Those who don’t plan never seem to have enough money and live paycheck to paycheck.

Elements of a Good Financial Plan Set Goals Analyze information Create a Plan Implement the Plan Monitor and Modify **A good financial plan must distinguish between wants and needs.

Needs - -the essentials or basics of life. Wants - -Items or services that improve the quality of **Which of these are wants and needs? -Water -T.V. -Home -Bible -Food -Love -Air Conditioning -Car -Cell phone -Education

**What makes us disagree on what are wants and needs? Values - - Beliefs and practices in one’s life that are very important. Factors Affecting our Values -Family -Friends -Teachers -Church -Work -Mass Media

What are your values? Family/Children Living a Comfortable Life Friends Living a moral life Education

Exit Ticket: Why is financial planning important?

Objective: After considering their own values, students will set financial goals that are specific, measurable, attainable, relevant, and time-bound.

A statement of something one wants or needs to do. 1. Setting Goals Goal - - A statement of something one wants or needs to do. One of the most valuable things you can learn is to identify goals clearly. To be effective, goals must be in writing and meaningful to you.

Define goals in a “SMART” way Specific - -exactly what? Measurable - -how much? - -how will I know if I succeeded? 3.Attainable - -can it be done? 4.Relevant)- - is it important to me? 5.Time bound- -exactly when?

What’s wrong with this goal? Beginning next Monday, Oct. 23, I will be starting a diet to lose 60 pounds. Beginning next Monday, Oct. 23, I will be starting a diet to lose 60 pounds by Christmas. Beginning next Monday, Oct. 23, I will be starting a diet to lose 30 pounds by the last day of school in May. Beginning next Monday, Oct. 23, I will be starting a diet to lose 30 pounds by the last day of school in May through the use of diet and exercise.

Beginning Monday, Oct. 15, I will start a diet to lose 30 pounds by the end of school in May. I will eat 1300 calories a day in 6 small meals. I will also exercise for 30 minutes at least 3 times a week. Specific Measurable Attainable Relevant Time Bound

**Smart Goal Time Lines Short Term- - up to 1 year Intermediate Term - -1-5 years. Long Term – 5 years or longer **Long term goals will include delayed gratification. You must be willing to give up something or do without something for awhile before reaping greater rewards.

*Keeping in mind your values, wants, and needs, make a “SMART” goal for one of the timelines. **Which one has a bigger impact on goals - -needs or wants? Why?

What’s missing from this goal? In order to purchase a new Nissan Maxima next June, I will save $1,000 a month for a good down payment by cutting gas, groceries, entertainment, and household spending in half. This will begin on November 15 and end June 15 when I have saved $8,000.

What’s wrong with this SMART goal? In order to buy gifts for family at Christmas, I will have a fixed amount put electronically into a Christmas Club account beginning every November. I will be able to spend the money beginning the following November.

2. Analyzing Information **The second step in financial planning is to find our where you stand with finances. See exactly how much money your getting and exactly how much your saving or spending. Cash Flow -- Measure of money received and spent.

Income -includes: -wages -allowances -gifts -money from selling items -interest on savings -child support payments -Social Security payments

3 Types of Expenses to Consider 1. Fixed Expenses -same each mo. Ex. House payment, rent, insurance, phone 2. Variable Expenses -differ each month Ex. Food, entertainment 3. Periodic or Occasional Expenses- have only sometimes Ex. oil change, sickness hair cut

“P.Y.F.” -means “Pay Yourself First” -count your savings as a bill that must be paid. -at least 10% of your income -adds up quickly -can have it taken out automatically through electronic transfer.

Staying on Track w/ your Budget Envelope System -label envelopes and put money in each. -run out of money, stop spending in that area. Tally System -label columns, keep receipts. list expenses under the right column.

**In financing your future, there are going to be opportunity costs. Value of what must be given up in order to obtain something else. Ex. In order to save extra money for the senior trip, I will only eat Mexican once a week instead of twice.

3. Create a Plan Identify the goal. Establish Criteria Examine Options **Financial Planning requires Decision making. 6 Stages of Decision Making Identify the goal. Establish Criteria Examine Options Weigh Pros and cons Make a Decision Evaluate Results

4. Implement the Plan Guidelines to sticking to a Plan Write down your goals. Share goals with others Only take the amount you need when going somewhere. Review your plan. Anticipate roadblocks

5. Monitor and Modify *Review plan at regular intervals. *Review plan when experiencing significant life changes. *Celebrate goal achievement!