Business and Personal Finance Chapter 1 Personal Finance Planning Section 1.1 Decisions and Goals in Personal Finance

Decisions and Goals in Personal Finance 1.1 In This Section . . . What is personal finance planning? It means spending, saving, and investing your money so you can have the kinds of life you want as well as financial security. This section discusses: Making Personal Financial Decisions Developing Personal Financial Goals Influences on Personal Financial Planning

Decisions and Goals in Personal Finance 1.1 What You’ll Learn How to create a financial plan How to develop your financial goals How to evaluate the economic factors that will affect your financial decisions

Decisions and Goals in Personal Finance Why It’s Important Learning the steps in the financial planning process will give you a solid foundation for making all your financial decisions, big and small, now and in the future.

Decisions and Goals in Personal Finance Video Clip: Why Have a Financial Plan?

Decisions and Goals in Personal Finance 1.1 Why Plan? Some of the benefits of planning are: You have more money, know how to use money to achieve your goals, and are financially secure; You have less chance of going into debt you can’t handle; You can help your partner and support your children.

Decisions and Goals in Personal Finance 1.1 Create a Financial Plan The financial planning process has six steps: Step 1 Determine your current financial situation Step 2 Develop your financial goals Step 3 Identify alternative courses of action Step 4 Evaluate your alternatives Step 5 Create and use your financial plan of action Step 6 Review and revise your plan

Decisions and Goals in Personal Finance 1.1 Common Cents Pay Yourself First List your income (from your allowance or a part-time job). Set an amount to put aside every month and calculate how much you will save up in a year.

Decisions and Goals in Personal Finance 1.1 Types of Goals Goals can be defined by the time it takes to achieve them: Short-term goals are those that you’ll reach in one year or less (saving to buy a computer). Intermediate goals take two to five years to reach (saving for a down payment on a house). Long-term goals take more than five years to reach (planning for retirement).

Decisions and Goals in Personal Finance 1.1 Guidelines for Setting Goals Your financial goals should: be realistic be specific have a clear time frame help you decide what type of action to take

Decisions and Goals in Personal Finance Write it Down Studies show that people who write down their goals are three times more likely to achieve them.

Decisions and Goals in Personal Finance Influences on Personal Financial Planning Many influences affect your day-to-day decisions. The three most important are: Life situations Personal values Economic factors

Decisions and Goals in Personal Finance Financial Goals and Activities for Various Life Situations

Decisions and Goals in Personal Finance Economic Conditions and Financial Planning

Decisions and Goals in Personal Finance 1.1 Check Your Understanding 1) Name the six steps used to create a financial plan. 2) What is the relationship between the timing of your goals and the type of good or service that you seek? 3) Describe two economic factors that affect financial decisions. How might these factors influence your financial planning?

Decisions and Goals in Personal Finance Think Critically Why is it important to distinguish between your needs and your wants?

Decisions and Goals in Personal Finance 1.1 End of Section 1.1