Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved.

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 10 Personal Financial Planning Why is it important to learn now how to plan for your financial future?

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. The financial planning process can help you reach your financial goals. Chapter 10 Personal Financial Planning

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. personal financial planning goals values liquidity service good consumer interest time value of money principle future value annuity present value Chapter 10 Personal Financial Planning

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 10 Personal Financial Planning

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Section 1Financial Decisions and Goals Define personal financial planning. List the six steps of financial planning. Identify factors that affect personal financial decisions. Chapter 10 Personal Financial Planning

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Personal Financial Decisions Section 1Financial Decisions and Goals Chapter 10 Personal Financial Planning Benefits of Planning Increased effectiveness in managing financial resources Debt avoidance and reduced dependence on others Improved personal relationships A sense of freedom from financial worries

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Personal Financial Decisions Section 1Financial Decisions and Goals Chapter 10 Personal Financial Planning Determine Your Current Financial Situation SavingsMonthly Income Monthly ExpensesDebts Step 1

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Personal Financial Decisions Section 1Financial Decisions and Goals Chapter 10 Personal Financial Planning Develop Your Financial Goals NeedsWants Step 2 Values are the beliefs and principles you consider important, correct, and desirable.

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Personal Financial Decisions Section 1Financial Decisions and Goals Chapter 10 Personal Financial Planning Identify Alternative Courses of Action Continue the same course of action Change the current situation Take a new course of action Expand the current situation Step 3

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Personal Financial Decisions Step 4- Evaluate Your Alternatives –Opportunity Cost –Risk Inflation Interest Rate Income Personal Liquidity Step 5-Create and Use Your Financial Plan of Action Step 6-Review and Revise Your Plan Section 1Financial Decisions and Goals Chapter 10 Personal Financial Planning

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Developing Personal Financial Goals Section 1Financial Decisions and Goals Chapter 10 Personal Financial Planning Short-Term Goals Intermediate Goals Long-Term Goals One year or less Two to five years More than five years

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 10 Personal Financial Planning

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Developing Personal Financial Goals Section 1Financial Decisions and Goals Chapter 10 Personal Financial Planning Tips for Setting Your Financial Goals Be realisticBe specific Have a clear time frame Know what type of action to take

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Influences on Personal Financial Planning Section 1Financial Decisions and Goals Chapter 10 Personal Financial Planning Life Situations Personal Situations Economic Factors

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Influences on Personal Financial Planning Section 1Financial Decisions and Goals Chapter 10 Personal Financial Planning Market Forces Financial Institutions Global Influences Economic Factors

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 10 Personal Financial Planning

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Often people with conflicting financial values and practices experience challenges in their business or personal relationships. How could such problems be minimized or prevented using what you have learned in this chapter? Answers will vary. Sample answer: Spouses who disagree about how much to spend on certain goods or activities may have frequent arguments. To reduce arguments, they need to communicate with each other before making decisions. Section 1Financial Decisions and Goals Chapter 10 Personal Financial Planning

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Explain the opportunity costs associated with personal financial decisions. Understand the time value of money. Identify eight strategies for achieving financial goals at different stages of life. Section 2Opportunity Costs and Strategies Chapter 10 Personal Financial Planning

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Personal Opportunity Cost Section 2Opportunity Costs and Strategies Chapter 10 Personal Financial Planning Personal Resources Require Management HealthKnowledge SkillsTime The student will investigate financial management strategies.

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Financial Opportunity Costs Time Value of Money Principal (Go Figure pg. 305) Interest (Go Figure pg. 305) Future Value (Go Figure pg. 306) Annuity Present Value The student will investigate financial management strategies.

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Achieving Your Financial Goals Section 2Opportunity Costs and Strategies Chapter 10 Personal Financial Planning Strategies Obtain financial records. Plan how you will spend your money. Spend wisely. Save on a regular basis. Borrow wisely. Invest to increase current income and for long-term growth Manage risk. Plan for retirement. The student will investigate financial management strategies.

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. A common piece of financial advice is “Do not live beyond your means.” Explain the meaning of this statement. Do you think it is good advice? Why or why not? The statement means do not spend more than what you have. Students should say that it is good advice because one of the eight strategies discussed in the chapter is spending wisely. Section 2Opportunity Costs and Strategies Chapter 10 Personal Financial Planning

Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Opportunity Cost Chapter 10 Personal Financial Planning An opportunity cost is what you give up to get something else. Source:

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