Download PPT 1-1 - Allen ISD

Section 1-1
 Write
a paragraph on why should you know
how to plan your personal finances even if
you can hire a financial planner?
Key Terms
Personal financial
planning
 Goals
 Values
 Opportunity costs
 Liquidity
 Service
 Good
 economics

Economy
 Supply
 Demand
 Federal reserve
System
 Inflation
 Consumer
 interest

 Personal
Financial planning:
 Is arranging to spend, save, and invest money
to live comfortably, have financial security,
and achieve goals
 Goals—the
things you want to accomplish
 There
are six steps to financial planning to
help you achieve your goals.
 Make
a list of items that relate to your
current financial situation such as:
 Savings
 Monthly job income
 Monthly expense
 Debts(money you owe)
 Values
are the beliefs and principles you
consider important
 For this step evaluate Needs vs. Wants
 Needs are something you must have to
survive.
 Wants are something you desire or would like
to have.
 Think
about all of the options of your goal
 Also consider all of the outcomes
 Considering both will help you make a good
financial decision.
 Look
at sources of Financial Information to
keep up to date with economic and social
conditions
 Consequences of Choices are choosing one
option and eliminating the rest of the
options.
 Opportunity costs– also called a trade off, is
what is given up when making one choice
instead of another.
•
Understanding risks—When you make a decision
you also accept a certain risk
–
–
–
–
–
Inflation risk—if you wait to buy something it could
cost more next year
Interest Rate Risk—interest rates go up and down and
you risk paying the higher cost if you wait
Income risk—You might lose your job due to health
problems, accidents, etc.
Personal risk—Having your friend help work on your
house instead of a trained carpenter may save you
money now but if it isn’t done right may cost more in
the future
Liquidity risk is the ability to easily convert financial
assests to cash without loss of value.
 Divide
students into groups of 3 or 4. Assign
each group a financial goal. Have each group
takes its goal through Steps 3 and 4 of the
goal process devise a chart to illustrate their
thinking.
 This
will lists ways to help you achieve your
goals.
 Sticking to it will help guide you to reaching
your goals
 As
things change in your life so will your
financial plan
 Therefore you will need to change your plan
to meet changing goals
 Time
 Goals
Frame of Goals
for Different Needs
 Short-Term
goals—take one year or less to
achieve
 Intermediate goals—take one to five years to
achieve
 Long Term goals—take more than five years
to achieve
 Students
will create a powerpoint of their
financial goals.
 Slide 1 will be their title slide
 Slide 2 will include a short-term goal and the
plan for them to reach that goal
 Slide 3 will include an intermediate goal and
the plan for them to reach that goal
 Slide 4 will include a long-term goal and the
plan for them to reach that goal
 All slides should include clip art
 Service—task
that a person or machine
performs for you
 Good—a physical item that is produced and
can be weighed or measured.
 Be
realistic
 Be specific
 Have a clear time frame
 Decide what type of action to take
 What
do you think your goals will be?
 Life
situations
 Personal Values
 Economic factors
 As
you experience new things in life your
financial decisions will change
 Economics
is the study of the decisions that
go into making, distributing and using goods
and services
 Economy is the ways in which people make,
distribute, and use their goods and services.
 Market
Forces—
 Supply—amount of goods and services
available for sale
 Demand—the amount of goods and services
people are willing to buy
 Financial
Institutions—
 Include banks, credit unions, and investment
companies
 Federal
Reserve System—central banking
organization of the United States
 On
the Internet look up and record the
following:
 Interest rates
 Inflation rates
 Consumer spending rates
 U.S. Gross domestic product
 Economic
Conditions are affected by three
things
 Consumer Prices
 Consumer Spending
 Interest Rates
 Over
time most prices of products go up.
 Inflation
is the rise in level of prices for
goods and services.
 Consumer
spending helps the economy by
helping to create and maintain jobs
A
consumer is a person purchase or uses
goods and services.
 The
price of money is called interest
 Interest
is the price that is paid to use
another’s money.
 In
a Word document or Journal answer the
following:
 What are the six steps used to create a
financial plan?
 What is the relationship between the timing
of your goals and the type of good or service
that you want?
 What are two economic factors that affect
financial decisions? How might these factors
influence your financial planning?
 Why is it important to distinguish between
your needs and your wants?