Looking at Your Finances Chapter 9.1

What is Financial planning? Clarifying your financial goals and what you need to do to reach them.

Benefits of Financial Planning: Live with a specific budget Identify financial priorities Establish funds to pay expenses Reduce or eliminate buying on impulse Prepare to face emergency expenses Reduce worry about financial health Meet long-term financial goals Gain or maintain a sense of financial stability Work toward retaining understanding of finances.

What does it mean to live within your means? Making smart decisions about spending based on the resources available.

What is premature affluence? Since many teens don’t have to pay for expenses such as groceries, electric bills and rent, they have the freedom to spend their money on other things such as clothing, music and nights out. This can create premature affluence ( a false sense of wealth)

The 4 elements of financial planning Identifying financial goals Guided by what’s important to you. Analyze Current Finances Create a budgeting sheet Assets-Items that you own, including your home Liabilities-Debts(money you owe others) Net worth-The difference between your assets and liabilities. Analyze Spending Habit Keeping a log of all spending during a typical month Planning for Financial Goals Developing a budget ( a plan for spending and saving your funds, based on your income and expenses).

Needs Change Over Time Requires revising your Financial Plan Marriage Having Children Children Moving Out Aging