Transcript Personal Financial Goal Setting

Do Now
 What
values do you have
regarding money?
 How do those values effect
your personal goals?
Money Management Rap
Video Questions

1) Why does the rap video say that money management is important?

2) Define these terms from the video:

Employer

Budget

Purchasing power

Savings Account

Deposit

Checking Account

3) What does the video mean by the phrase “I wanna control money
and not let it control me?
Personal Finance
Chapter 1
Personal Financial
Planning
The Money Plan: Respond in
your notebook

Q: I am a high school student. I do not have money for
investments or buying property. So what difference does
it make how I spend my money now?

A: You will not always be a student. Learning to save
and use money wisely now will help you know how to
achieve financial security in the future. While you are in
high school, financial planning can help you decide how
to spend, save, and invest your money for special
purchases or activities that matter to you. You may
even be able to buy stock
Personal Financial Decisions
Personal finance is everything in your life that involves
money.
Some of the benefits of personal financial planning are:

You have more money and financial security.

You know how 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 your
children, if you have a family.
6 Steps of Financial Planning

The financial planning process has six steps to help you reach
your goals.
Step 1: Determine Your Current Financial Situation
To figure out your current financial situation, make a list of
items that relate to your finances, such as:

Savings

Monthly income (job earnings, allowance, gifts, and
interest on bank accounts)

Monthly expenses (money you spend)

Debts (money you owe to others)
When you have determined your financial situation, you will
be able to start planning.
6 Steps of Financial Planning
Step 2: Develop Your Financial Goals
To develop clear financial goals, think about your
attitude toward money and ask yourself some questions:

Is it more important to spend your money now or
to save for the future?

Would you rather get a job right after high school
or continue your education?

Do your personal values affect your financial
decisions?

Do you know the difference between your needs
and your wants?
6 Steps of Financial Planning
Step 3: Identify Your Options
It is impossible to make a good decision unless you know
all your options. If you are saving $50 a month, for
example, you might have these options:

Expand the current situation by increasing the
amount of money you save every month to $60.

Change the current situation by investing in stocks
instead of putting your money into a savings
account.

Start something new by using the $50 to pay off
your debts.

Continue the same course of action
6 Steps of Financial Planning
Step 4: Evaluate Your Alternatives
You must consider the consequences and risks of each
decision you make during the financial planning
process.
You can do this by:

Using the many available sources of financial
information to keep you up-to-date with social
and economic conditions that can affect your
financial situation.

Understanding the opportunity cost of your
decisions.
6 Steps of Financial Planning
Understanding Risks
When you make a financial decision, you also
accept certain financial risks. Some types of
financial risks include:

Inflation Risk

Interest Rate Risk

Income Risk

Personal Risk

Liquidity Risk
6 Steps of Financial Planning
Step 5: Create and Use Your Financial Plan of
Action
A plan of action is a list of ways to achieve your financial
goals.
Some examples of plans of action include:

Cutting back on spending to increase your
savings.

Getting a part-time job or working more hours at
your present job to increase your income.
6 Steps of Financial Planning
Step 6: Review and Revise
Your Plan
As you get older, your finances
and needs will change. That
means that your financial plan
will have to change too. You
should reevaluate and revise
it every year
The Importance of Financial
Planning
Activity: Importance of
Financial Planning Skit

Your goal is to work in groups of 3-4 to design a skit that
will outline the importance of financial planning. Your
skit needs to include at least 3 of the steps to financial
planning with a detailed explaination of how those steps
can be implemented.

Feel free to have FUN with this activity: Some ideas for
your skit could include

A commercial for people who have struggled with financial
planning in the past

A talk show where someone is being confronted about
their poor financial management skills

A News report or interview with a financial expert about
the importance of financial planning
Homework

Practice skits, write out scripts or
bring props to present next class

Read chapter 1.1-take reading notes
and ACE vocabulary
Vocabulary Quiz

Using the ACE system define the following words:
 Personal
Financial Planning
 Goals:
 Values:
 Opportunity
Cost:
Personal Finance Chapter 1:
Developing Personal
Financial Goals
Types of Financial Goals

Two factors will influence
your planning for financial
goals. These factors are:
 1)
The time frame in
which you would like to
achieve your goals.
 2)
The type of financial
need that inspires your
goals.
Time Frame of Goals
Goals can be defined by the time it takes to achieve
them:

Short-term goals take one year or less to
achieve (such as saving to buy a computer).

Intermediate goals take two to five years to
achieve (such as saving for a down payment on
a house).

Long-term goals take more than five years to
achieve (such as planning for retirement).
Start with short-term goals that may lead to longterm ones.
Goals for Different Needs
Services and goods are two different categories of
financial needs. A haircut is an example of a service,
while a new car is a good.
How you establish and reach your financial goals will
depend on whether a goal involves the need for:

Consumable goods (such as a soda)

Durable goods (such as a car)

Intangible items (such as an education)
Guidelines for Setting Goals
When setting your financial goals, follow these
guidelines:

Your financial goals should be realistic.

Your financial goals should be specific.

Your financial goals should have a clear time
frame.

Your financial goals should help you decide
what type of action to take.
Your financial goals will change as you go through
life.
Financial Goal Setting Video
Notebook Activity

In your notebook, use the information
we’ve learned today about goal setting
to set 4 financial goals for yourself

2 should be short term goals and 2
should be long term goals.

Talk with the person next you about the
goals you have set for yourself and
come up with a short plan of how to
acheieve these goals
Adding Personal Financial
Goals to your Skit

Now that you have a skit that outlines the importance
of financial planning, find a way to implement today’s
lesson on Personal Financial Goals.

It doesn’t need to be long and drawn out, just be sure
to find a way to mention it in your skit

Performances will begin in 20 minutes

With your skit you must turn in:

A script or storyboard outlining the major points and
events that the skit will cover
Homework:

Come up with a common financial
problem that teens today face. Turn
this financial problem into a letter
to an advice columnist asking for
help.

Tomorrow we will play the role of
advice columnists and try to answer
each other’s financial problems
with the information we have
received in class
Do Now

1) Name 2 or 3 financial problems
that teenagers face?

2) Name 2 or 3 financial problems
that adults face?

3) How do these problems differ?
How are they the same?
Chapter 1: Influences on
Personal Financial Planning
What Influences my
Financial Decisions?

Many factors will influence
your day-to-day decisions
about finances.

The three most important
factors are:

Life situations

Personal values

Economic factors
Life Situations and Personal
Values
Your financial planning will be affected by changes in
your life situation, such as:

Going to college

Starting a new career

Getting married

Having children

Moving to a new city
Your personal values also influence your financial
decisions.
Economic Factors
Economic factors across the country
and around the world play a role in
day-to-day financial planning and
decision making for most people.
To understand economics and the
economy, you need to be aware of:

Market forces

Financial institutions

Global influences

Economic conditions
Market Forces

The forces of supply and
demand determine the prices
of products, or goods and
services, you purchase.

When there is a high demand
for an item, or when a
company cannot manufacture
enough of a certain product to
keep up with the demand, the
price of the product rises.
Supply and Demand: Indiana
Jones Economovies
Financial Institutions
Most people do business with financial
institutions, which include:

Banks

Credit unions

Savings and loan associations

Insurance companies

Investment companies
Financial institutions provide services
that increase financial activity in the
economy.
The Federal Reserve System
The Federal Reserve System’s primary role in the
U.S. economy is the regulation of the money
supply. The Fed controls the money supply by:

Determining interest rates

Buying or selling government securities
Its decisions affect:

The interest rate you earn on your savings

The interest rate you pay when you borrow
money

The prices of the products you buy
The Federal Reserve
Explained in 3 Minutes
Global Influences
You and the money you spend are part of the
global marketplace, which is another
economic factor that can affect financial
planning.
The economy of every nation is affected by
competition with other nations. When more
money is leaving the U.S. than entering it, for
example:

Less money is available for spending
and investing.

Interest rates may rise.
These global influences also affect personal
financial decisions.
Economic Conditions
Current economic
conditions also affect
your personal financial
decisions. The three
important economic
conditions are:
 Consumer prices
 Consumer
spending
 Interest rates
Consumer Prices
Over time the prices of most products
inflate.
The main cause of inflation is an increase
in demand without an increase in supply.
For example, prices will rise if:

People have more money to spend
because of pay increases or
borrowing.

The same amounts of goods and
services are available.
The inflation rate affects consumer prices
and varies from year to year.
Interest Rates
Interest rates represent the cost of
money and are also influenced by
supply and demand.
Interest rates will affect your financial
planning as you:

Save

Invest

Obtain loans
Interest rates are just one facet of the
economic factors that influence your
personal financial planning.
Interest Rates: Explained
Activity: Supply and Demand
Article Review

To help you get a better understanding of how supply and demand
influences consumerism, you will read a variety of current events
articles.

You have been handed a set of articles: Section A or Section B. Using the
articles, read through them critically and complete the graphic
organizer. You will need to be able to identify the

A) Market

B) Cause of change in supply/demand

C) Demand (Did it increase, decrease or stay the same)

D) Supply (Did it increase, decrease or stay the same?)

E) Solution: How could you fix the supply or demand issue?
Activity: Jigsaw Supply and
Demand Activity

Find 3 other people who had a different article from
you and have them explain to you how their article
dealt with supply and demand.

For each article you need to identify the following:

Market

What is being supplied/demanded?

How are the supply/demand issues being dealt with?

Is there a better way to handle the supply and demand
issues? If so, explain.
Homework

Read chapter 1.2 Opportunity Costs
and Financial Strategies

ACE Vocabulary Chapter 1.2 (Time
value of money, principal, future
value, annuity, present value)

Vocabulary Quiz next class 8/31

Bring Crayons/Markers or colored
pencils next class!!!
Do Now: Vocabulary Quiz

Using the ACE vocabulary strategy, define the following
terms

Principal:

Future Value:

Present Value:
Chapter 1.2
Opportunity Costs
and Financial
Strategies
Personal and Financial
Opportunity Costs
Whenever you make a choice, you
have to give up, or trade off, some of
your other options.
When making your financial decisions
and plans, you will need to carefully
consider:

Personal opportunity costs

Financial opportunity costs
Personal Opportunity Costs
Like financial resources, your personal
resources require management. These
resources include:

Health

Knowledge

Skills

Time
You have to decide how to use your time to
meet your needs, to achieve your goals,
and to satisfy your values.
Financial Opportunity Costs
You also must make choices about how you spend
money.
To help make choices, consider the time value of
money every time you:

Spend

Save

Invest
Think about the time value of this money as an
opportunity cost.
Cashville Kids: Opportunity
Cost Video
Opportunity Cost Cartoon
Activity

Your job is to design a cartoon that clearly illustrates your
understanding of the concept “Opportunity Cost”. Cartoon may
be done in the style of a comic strip (Several slides) or in the
style of a political cartoon (one large picture)

Project should include the following:

___ Large, clear and colorful title (5 points)

___ Clear depiction of an opportunity cost through pictures and/or
dialogue ( 20 points)


___ Colorful, creative visual

___ Neat and organized

___ Demonstrates understanding of the topic
____Short explanation of your cartoon on back in paragraph form (10
points)
Examples: Opportunity Cost
Cartoon
Homework

Financial Portfolio Project: Due September
8th

Read Article: “Opportunity Cost at the
Olympics” and take notes in your notebook.
Be prepared for a reading quiz over the
material

Notebook check September 8th. Please be
sure your TOC and notebook are up to date
with all assignments
Questions You Will Answer:
 What
are the five steps in the
personal financial process?
 How do you set “SMART” goals?
 How do your choices affect your
money?
 How can money help you live a
satisfying life?
Quotes to Consider
“Most people don’t plan to fail. They simply fail to plan.”
“If you don’t know where you are going, any road will take
you there.”
Can You Believe…
 Only
___% of teenagers
have ever made a written
plan for their money.
 In
a national survey, ___% of
teenagers thought earnings
from a savings account
might not be taxed.
Can You Believe…
 ___%
of teenagers surveyed
thought you had no
responsibility at all to repay
fraudulent charges on a credit
card.
 ___%
of teenagers surveyed said
they put some money in savings
when they receive an allowance
or earn some money.
Can You Believe…
 ___%
of teenagers are likely
to go to their parents for
financial information.
 ___%
of teenagers consider
themselves to be spenders
rather than savers.
Financial Planning Process
STEP 1
Set Goals
NEEDS vs WANTS

NEEDS

Essentials…the basics of life

Food

Clothing

Shelter
NEEDS vs WANTS

WANTS

Simply increase the quality of living
Assignment 1.1
page 4
“My Needs and Wants: Can I Tell the
Difference”
Values
 The
beliefs and
practices in your life
that are very
important to you.
 Family
 Friends
 Teachers
 Church
 Work
Assignment 1.2
My Values
Page 5
Specific
Measurable
Attainable
Realistic
Time-bound
SMART Goals Timelines
 Short
Up
Term
to three months
 Intermediate
Three
 Long
Term
months to one year
Term
Longer
than one year
DELAYED
GRATIFICATION
Assignment 1.3
My SMART Goals
Page 7
Save $25 so
I can take
my friend
out for
pizza.
1st of next
month
Short term
$25.00
$25.00
$7.50
$7.50
Step 2
Analyze Information
Cash Flow
A
measure of
the money you
receive and the
money you
spend.
Assignment 1.4
Personal Spending Record Page 8
Step 3
Create A Plan
Decision Making

The process of considering and analyzing information in
order to make a decision.
Factors that Can Influence Your
Goal Setting and Decision Making





Opportunity Cost

Choosing one option may mean giving up altogether
another goal.

It’s a tradeoff!
Assignment 1.5
My Decision
Pros
Cons
Step 4
Implement the Plan
Three Rs of Money

Reality

Responsibility

Restraint
Step 5
Monitor and Modify
the Plan
Monitor and Modify

Are your existing goals still worth doing?

Is there a new goal to add to your list?

Is there an existing goal you want to drop or change?
ACTION STEPS

Page 14

Write down two BIG GOALS

Write the first and second step for each goal
Questions To Answer:
 What
are the five steps in the
personal financial process?
 How do you set “SMART” goals?
 How do your choices affect your
money?
 How can money help you live a
satisfying life?
2001 National Endowment for Financial
Education, Greenwood Village, Colorado,
80111