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Glencoe Economics and Personal Finance
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Chapter
Personal Financial Planning
10
Why is it important to learn now how to
plan for your financial future?
Glencoe Economics and Personal Finance
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Chapter
Personal Financial Planning
10
The financial planning process can
help you reach your financial goals.
Glencoe Economics and Personal Finance
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter
Personal Financial Planning
10
Glencoe Economics and Personal Finance
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter
10
Personal Financial Planning
Section 1 Financial Decisions and Goals
Personal Financial Decisions
Benefits of Planning
Increased
effectiveness
in managing
financial
resources
Glencoe Economics and Personal Finance
Debt
avoidance
and reduced
dependence
on others
Improved
personal
relationships
A sense of
freedom from
financial
worries
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Chapter
10
Personal Financial Planning
Section 1 Financial Decisions and Goals
Personal Financial Decisions
STEP 1:
Determine Your Current Financial Situation
Savings
Monthly Income
Monthly Expenses
Debts
Glencoe Economics and Personal Finance
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Step 2: Develop Your Financial Goals
Develop Clear Financial Goals
Ask these questions:
– Is it more important to spend my money now or save for
the future?
– Would I rather get a job out of high school or continue my
education?
– Will my chosen career require more education or technical
training?
– How do my personal values affect my financial decisions?
Periodically analyze your financial values and goals
– Analysis allows you to differentiate your needs from
wants.
Glencoe Economics and Personal Finance
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Chapter
10
Personal Financial Planning
Section 1 Financial Decisions and Goals
Personal Financial Decisions
Step 3: Identify Alternative Courses of Action
Continue the same
course of action
Expand the current
situation
Change the current
situation
Take a new course
of action
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Chapter
10
Personal Financial Planning
Section 1 Financial Decisions and Goals
Developing Personal Financial Goals
Short-Term
Goals
Intermediate
Goals
Long-Term
Goals
One year or
less
Two to five
years
More than five
years
Glencoe Economics and Personal Finance
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Chapter
10
Personal Financial Planning
Section 1 Financial Decisions and Goals
Developing Personal Financial Goals
Tips for Setting Your Financial Goals
Glencoe Economics and Personal Finance
Be realistic
Be specific
Have a clear
time frame
Know what type of
action to take
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Chapter
10
Personal Financial Planning
Section 1 Financial Decisions and Goals
Influences on Personal Financial Planning
Life
Situations
Glencoe Economics and Personal Finance
Personal
Situations
Economic
Factors
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Chapter
10
Personal Financial Planning
Section 1 Financial Decisions and Goals
Influences on Personal Financial Planning
Economic Factors
Market
Forces
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Financial
Institutions
Global
Influences
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Chapter
10
Personal Financial Planning
Section 1 Financial Decisions and Goals
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.
Glencoe Economics and Personal Finance
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PERSONAL FINANCIAL PLANNING
Be Aware of the Risks
When you make certain financial decisions, you
need to be aware of the potential risks associated
with each decision you make—or do not make.
Inflation Risk
Interest Rate Risk
Liquidity Risk
Personal Risk
Income Risk
Glencoe Economics and Personal Finance
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Chapter
Personal Financial Planning
10
personal financial
planning
goals
values
liquidity
service
good
Glencoe Economics and Personal Finance
consumer
interest
time value of money
principle
future value
annuity
present value
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Chapter
10
Personal Financial Planning
Section 1 Financial Decisions and Goals
Define personal financial planning.
List the six steps of financial planning.
Identify factors that affect personal financial decisions.
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End of Section 1
Next Slide:
Creating Financial Goals
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What Does a Financial Goal Look Like?
A financial goal states:
1. What you plan to accomplish
2. What resources you'll need to make it
happen
3. How much time you'll need to make it happen
4. How you plan to make your goal fit into your
overall budget and life.
Ready to create your own financial goals?
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Here’s How to Complete the Goals Worksheet
List your financial goals
Estimate the Cost
Set a Target Date
Determine how much you need to save (daily,
weekly, bi-weekly, monthly, etc.)
Budget for your goals
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TIPS!
Be realistic about how much time and money it will
take to accomplish each goal – an estimate that is
too low will only frustrate you.
Keep your motivation by revisiting your list
frequently to check on your progress.
Setbacks will happen. If something throws you off
of your target date, don't give up – set a new date.
Have more goals than you can work on at once?
Then, determine which ones are most important to
you, and make those your first priority.
Glencoe Economics and Personal Finance
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Chapter
10
Personal Financial Planning
Section 2 Opportunity Costs and Strategies
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.
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Chapter
10
Personal Financial Planning
Section 2 Opportunity Costs and Strategies
Personal Opportunity Cost
Personal Resources Require Management
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Health
Knowledge
Skills
Time
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Chapter
10
Personal Financial Planning
Section 2 Opportunity Costs and Strategies
Achieving Your Financial Goals
Strategies
1
5
Obtain financial records.
2
Plan how you will spend your
money.
3
Borrow wisely.
6
Invest to increase current
income and for long-term growth
7
Spend wisely.
4
Manage risk.
8
Save on a regular basis.
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Plan for retirement.
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Chapter
10
Personal Financial Planning
Section 2 Opportunity Costs and Strategies
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.
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Chapter
Personal Financial Planning
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Opportunity Cost
An opportunity
cost is what you
give up to get
something else.
Source: www.collegeboard.com
Glencoe Economics and Personal Finance
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Chapter
Personal Financial Planning
10
Glencoe Economics and Personal Finance
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter
Personal Financial Planning
10
Glencoe Economics and Personal Finance
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Glencoe Economics and Personal Finance
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