4 ValuesThe beliefs and practices in your life that are important to you.Reflect your upbringingChange little without constant effortFamilyFriendsWorkHonestySelf-RelianceIndependenceReligion
5 Financial ValuesValues strongly influence our spending habits. We don’t usually spend our money on things we do not feel are important. Typically, the more important something is, the more we are willing to spend on it.
6 NEEDS vs WANTS NEEDS Essentials…the basics of life Food Clothing Shelter
7 NEEDS vs WANTSWANTSSimply increase the quality of living
8 What is a goal?A written statement of something a person wants or needs to accomplish.ExamplesGraduate from high schoolEarn a college degreeBuy a carGet a jobLose 15 pounds
9 Why Set Goals?Would you set out on a cross-country adventure without a road map?Setting goals are like a road mapProvide directionFocus on the important thingsKeep end results in mind
10 Michael Phelps won the gold medal and set a world record in the Men’s 200 meter freestyle with a one minute seconds
11 Time-bound Goals Short Term Goals Long Term Goals Present to 6 monthsImprove grades at schoolMake the basketball teamLong Term Goals6 month and longerAttending collegeBuy a new carTHIS WILL VARY AMONG RESOURCES
12 Realistic- Do not set goals for something unrealistic Smart GoalsSpecific- State exactly what is to be done with the money.Measurable-Write the exact dollar amountAttainable- How can it be reachedRealistic- Do not set goals for something unrealisticTime-bound- When will the goal be met
13 What’s Missing?Financial Goal #1: I plan to save $5,000 for college living expenses in four years.AttainableFinancial Goal #2: I plan to save for a new computer by saving $150 each month for one year.MeasurableFinancial Goal #3: I plan to save $2,500 by saving $105 each month for 2 yearsSpecific
14 What’s Missing? (continued) Financial Goal #4: I plan to save $1,500 to buy a used car by saving $75 from each paycheck.Time BoundFinancial Goal #5: I plan to save $2,000 to pay for a new computer by saving my whole paycheck for the next 6 monthsRealistic
15 Decision MakingThe process of gathering and analyzing information in order to make a decision.
16 Factors that influence Decisions ValuesPeersHabitsConsequencesFamilyAgeFeelings (love, rejection, anger)Risks
17 Steps for Decision Making Set GoalsAnalyze InformationCreate a PlanImplement the PlanMonitor and Modify the PlanSource: NEFE
18 The 3 Rs of Money Reality –Limited amount of time and money to use Responsibility- Handle money wiselyRestraint – Save your money for a future goal.
19 Types of Influences on Financial Behavior CulturalLanguage, the way someone is raised, geographic location.SocialPeer pressure, fads, marketing, advertisingEmotionalBinge spending, comfort shopping, fear of making a decision
20 Peer PressureThe influence others have on an individual’s personal decisions.
21 Forms of Peer Pressure as it Relates to Purchasing Decisions FriendsNewspapersMagazinesTelephone DirectoriesDirect MailCommercialsCatalogsRadio Advertisements
22 Emotional Factors Related to Peer Pressure GossipAcceptanceDisapprovalInsecuritiesBoyfriend/GirlfriendSarcasmFearClubsAthleticsCliquesRich/Poor
23 Scarcity“Scarcity is an economic principle stating that because of limited resources, an economic system cannot possibly produce all the goods and services that people want; therefore, choices must be made about how the limited resources will be used.”-Consumer Economics & Education, Glencoe, 2003
24 Marketing, Advertising and Sales Strategies/Techniques People who sell products and services are fishing for customers. They lure them in with sales, coupons, and other enticements. Unlike fish, consumers can benefit in this situation – if they know how to take advantage of special purchasing opportunities.
25 Examples of Marketing, Advertising and Sales Strategies Clearance SalesHoliday SalesCouponsRebatesSweepstakesContestsSales PeopleAttractive DécorBackground MusicItems purchased most often are in back of store (bread/milk)Most profitable items are given prominent positions.
26 Opportunity CostRefers to what a person gives up when a decision is made.This cost, often called a trade-off, may involve one or more of your resources:TimeMoneyEffortWatch Opportunity Cost Clip
27 Financial Planning The process of: defining goals developing a plan to achieve themPutting the plan into action
28 Benefits of Having a Financial Plan? You have more money and financial security.You know where to use money to achieve your goals.You have less chance of going into debt you cannot handle.You can help your partner and support children if you have a family.
29 How do I make a Financial Plan? Determine your current financial situation.Make a list of items that relate to your finances:Savings/InvestmentsMonthly Income (Job Earnings, Allowance, Gifts, Interest)Monthly ExpensesDebts
30 How do I make a Financial Plan? Develop your financial goals.Consider your attitude toward money.Ask yourself the following:How do I determine if it is more important to spend money now, or save it for the future?How do your personal values affect your financial decisions?
31 How do I make a Financial Plan? Identify your options.Expand the current situation.Change the current situation.Start something new.Continue the same course of action.
32 How do I make a Financial Plan? Evaluate your alternatives.Consider the risks and consequences of each decision you make.Be aware of all sources of financial information.Evaluate consequences of choices, both good and bad.Understand risks involved with choices.
33 How do I make a Financial Plan? Create and use your financial plan of action.Just DO it!
34 How do I make a Financial Plan? Review and revise your plan.As we get older and our circumstances, our finances, needs, and wants will change, therefore, our financial plan must be flexible as well.