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Transcript
Building Blocks of Personal Finance
Personal finance is a curriculum area in which many things are hierarchical (they build upon each other).
Without having the first step, or the basic foundation, nothing else can be achieved. Using building blocks is a
fun way to visually illustrate the levels of each concept to students. The following are some examples.
The Building Blocks of Financial Success
1. Foundation
a. Use of regular income to provide basic lifestyle and savings to meet emergencies.
2. Base
a. The base of a solid foundation includes having basic money management tools such as a
checking account, savings account, money market account, and insurance protection.
3. Establish
a. When developing a financial plan, a person must have long and short term goals, organized
financial records, a spending plan, and an emergency savings fund.
4. Manage
a. Solid financial management includes properly managing large expenses including housing,
transportation, insurance, and income taxes.
5. Handle
a. A person must be able to responsibly handle credit cards, loans, savings accounts, and education
costs.
6. Invest
a. Investments must be made for an individual’s retirement or long term goals in tools such as
mutual funds, stocks, bonds, real estate, and pension plans.
7. Achieve
a. Once all of these steps are taken, a person will lead a financially successful life.
Relationship Between Education and Income
(Investment in Yourself Lesson Plan 1.1.9)
(Annual Household Earning)
1. No High School Diploma - $20,724
2. High School Diploma - $34,373
3. Some College - $41,658
4. Bachelor’s Degree - $62,188
5. Professional Degree - $95,309
Steps to Creating Spending Plans
(Developing a Spending Plan Lesson Plan 1.15.2)
1. Set Goals
2. Organize
3. Decide
4. Implement
5. Control
6. Evaluate
Steps to Goal Setting
(Setting Financial Goals Lesson Plan 1.17.3)
1. Specific
2. Measurable
3. Attainable
4. Realistic
5. Time Bound
Investment Risk Pyramid
(Language of the Stock Market Lesson Plan 1.12.2)
1. Financial Security (low risk)
2. Safety and Income
3. Growth
4. Speculation (high risk)
Steps to Wise Buying
(Wise Shopping Lesson Plan 1.2.2)
1. Prioritize Wants
2. Pre-shopping Research
3. Fitting the Budget
4. Comparison Shopping
5. Negotiating
6. Making the Decision
7. Complimenting/Complaining appropriately
Personal Financial Management Pyramid
(Life Cycle of Financial Planning Lesson Plan 1.11.2)
1. Estate Planning
2. Term Wealth
3. Risk and Tax Management
4. Credit and Debt Management
5. Management