1. Basic Financial Planning

2. 5-Minute Assignment
Your uncle just gave you 1 million dollars to spend as you wish. What will you do with this money and why?

3. Personal Financial Planning
What are some major personal financial issues that individuals and families encounter in their lives?
* major acquisitions (car, house)
* insurance claims
* bankruptcy
5 major areas of personal finance:
1. Management and acquisition of assets
2. Borrowing: credit cards and consumer loans
3. Insurance
4. Investments
5. Retirement
PF planning addresses major PF planning problems that individuals and families encounter.
Need of PF planning:
complex fin envir; volatile economy
can no longer depend on employee or govt benefits

4. What is personal financial planning?
Personal financial planning is the process of managing your money to achieve personal economic satisfaction.

5. Rewards of Financial Planning
1. Maintain and improve our standard of living - the necessities, comforts and luxuries that we have or desire. .
Goal of most people is to accumulate as much wealth as possible while maintaining current consumption at a level that provides a desired standard of living.

6. .. continue.. Rewards of Financial Planning
2. Control consumption patterns to live well today and tomorrow!
Average propensity to consume - % of each dollar of income that is spent rather than saved.

7. .. continue.. Rewards of Financial Planning
3. Accumulate wealth.
Personal financial planning helps us direct our financial resources to the most productive areas

8. Benefits of a Plan A financial plan helps people:
live within their income
identify financial priorities
allocate funds to meet expenses
meet financial emergencies and reduce credit use
reduce uncertainty and conflict about financial affairs
gain a sense of financial independence and control
save and invest to reach financial goals

9. FINANCIAL PLANNING PROCESS
Determine current financial situation
Develop financial goals
Identify alternative courses of action
Evaluate alternatives
Create and implement financial plan
Re-evaluate and revise the financial plan

10. DEVELOPING PERSONAL FINANCIAL GOALS
Types of financial goals
Timing of goals
Goals of different financial needs
Goal-setting guidelines

11. INFLUENCES ON PERSONAL FINANCIAL PLANNING
Life situation and personal values
Economic factors
Market forces
Financial institutions
Global influences
Economic conditions

12. OPPORTUNITY COSTS AND THE TIME VALUE OF MONEY
Personal opportunity costs
Financial opportunity costs
Interest calculations
Future value of a single amount
Future value of a series of deposits
Present value of a single amount
Present value of a series of deposits

13. ACHIEVING FINANCIAL GOALS
Components of personal financial planning
Obtaining
Planning
Savings
Borrowing
Spending
Managing risk
Investing
Retirement and estate planning
Developing a flexible financial planning
Implementing financial plan

14. ASSIGNMENT 1
After going through the first lecture and learning about the importance of preparing your short-term and long-term plans, do a reassessment on your first plan on how you are going to spend the money your uncle gave you.

15. ASSIGNMENT 2 SETTING GOALS WORKSHEET
List several important short-term, intermediate
and long-term goals.
Estimate the cost of each goal and when you
expect to reach the goal.
Record the amount of money already saved to
meet this goal.
Figure how much money to save each month
in order to reach the goal.

16. SHORT-TERM GOALS COST WHEN ALREADY SAVED MONTHLY SAVINGS WHERE SAVED1. 2. 3.
LONG-TERM GOALS