Transcript Chapter 10 Personal Financial Planning

Glencoe Business 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?
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Chapter
Personal Financial Planning
10
The financial planning process can help you reach your
financial goals.
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Chapter
Personal Financial Planning
10
personal financial
planning
goals
values
liquidity
service
good
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consumer
interest
time value of money
principle
future value
annuity
present value
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Chapter
Personal Financial Planning
10
Glencoe Business and Personal Finance
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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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Chapter
10
Personal Financial Planning
Section 1 Financial Decisions and Goals
Personal Financial Decisions
Benefits of Planning
Increased
effectiveness
in managing
financial
resources
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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
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Chapter
10
Personal Financial Planning
Section 1 Financial Decisions and Goals
Personal Financial Decisions
Develop Your Financial Goals
Step 2
Needs
Wants
Values are the beliefs and principles you
consider important, correct, and desirable.
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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
Personal Financial Decisions
Step 4- Evaluate Your Alternatives
– Opportunity Cost
– Risk
•
•
•
•
•
Inflation
Interest Rate
Income
Personal
Liquidity
Step 5-Create and Use Your Financial Plan of
Action
Step 6-Review and Revise Your Plan
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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
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Chapter
Personal Financial Planning
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Glencoe Business 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
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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
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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
Personal Financial Planning
10
Glencoe Business and Personal Finance
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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.
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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
Health
Knowledge
Skills
Time
The student will investigate financial management strategies.
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Financial Opportunity Costs
Time Value of Money
Principal (Go Figure pg. 305)
Interest (Go Figure pg. 305)
Future Value (Go Figure pg. 306)
Annuity
Present Value
The student will investigate financial management strategies.
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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.
Plan for retirement.
The student will investigate financial management strategies.
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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
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