M ONEY M ANAGEMENT - F INANCIAL P LANNING Financial Literacy

F INANCIAL P LANNING Many people follow a similar financial pattern during their life BUT Everyone has an individualized financial plan

Financial Planning W HAT INFLUENCES A PERSON ’ S FINANCIAL PLAN ? Many factors that can be expected or unexpected: Values, Goals, & Personal Choices Life Cycle Needs Major Life Events Lifestyle Conditions

Choose Financial Goals Track Current Income & Expenses Create Categories & Allocate $ to Each Implement & Control Evaluate & Make Adjustments The Planning Process

F INANCIAL P LANNING Financial planning - a tool used to achieve financial success based upon the development and implementation of financial goals Financial goals - specific objectives to be accomplished through financial planning Financial Goals should be SMART goals

SMART F INANCIAL G OALS S pecific M easurable A ttainable R ealistic T ime Bound State exactly what is to be done with the money involved Write the exact dollar amount Determine how it can be reached, which is often determined by the individual’s budget Do not set the goal for something unattainable or unrealistic Specifically state when the goal needs to be reached

C HOOSE F INANCIAL G OALS Types of Financial Goals Short-term Goals – within one year Long-term Goals – longer than one year Life-span Plan – includes everything The Budget Process

H OW WILL THINGS CHANGE ? Age Group Activity High School Young Adult Adult – w/ or w/o children Working Parent or Adult Midlife Pre-Retirement Retired 65 and older

C OMPONENTS OF A S PENDING P LAN

W HAT DO YOU THINK ? Financial success depends on luck more than planning.

W HAT DO YOU THINK ? Spending small amounts of money now will not affect your life-span financial success. Budgeting is balancing your short-term spending for long-term success.

W HAT DO YOU THINK ? Your spending decisions do not affect anyone but yourself. Family Current family Future family Community

C OMPONENTS OF A S PENDING P LAN Gumball machine represents components of the financial planning process Income - money earned Gumballs going into the machine Wages from a job, allowance, gifts

C OMPONENTS OF A S PENDING P LAN Expense - money spent Money going out of the gumball machine Fixed expenses - may have a fixed amount due each month and are contractual Flexible expenses -can vary each month in the amount owed and are not contractual

S PENDING P LAN A CTIVITY Decide if each item would be: income a fixed expense a flexible expense

S PENDING P LAN A CTIVITY Paying Rent Fixed expense Wages Income

S PENDING P LAN A CTIVITY Groceries Flexible expense Internet bill Fixed expense

S PENDING P LAN A CTIVITY Tips Income or Flexible Expense Utilities Fixed Expense or Flexible Expense

S PENDING P LAN A CTIVITY Gifts Income or Flexible Expense Savings Fixed Expense, Flexible Expense or Income

S PENDING P LAN A CTIVITY Automobile registration Fixed expense Eating out/Snacks Flexible expense

S PENDING P LAN A CTIVITY Scholarships Income Hobbies Flexible expense or Income

S PENDING P LAN A CTIVITY Cell Phone Bill Fixed expense but amount may be flexible Movies Flexible expense

1 - Choose Financial Goals 2 - Track Current Income & Expenses 3 - Create Categories & Allocate $ to Each 4 -Implement & Control 5 - Evaluate & Make Adjustments The Planning Process Steps 1-3 help develop a spending plan Steps 4 & 5 help maintain a spending plan