NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Unit 1 - Your Financial Plan:Unit 1 - Your Financial Plan:Where It All BeginsWhere It All Begins
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
““Most people don’t plan to fail…Most people don’t plan to fail…They simply fail to plan!”They simply fail to plan!”
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NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
What is Financial Planning
• A blueprint or plan for managing all components of a person’s money.
• Arranging to spend, save, and invest money to live comfortably, have financial security, and achieve goals.
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Financial planning is a thinking Financial planning is a thinking process that helps achieve goals.process that helps achieve goals.
Financial Planning is more than budgeting and investing.
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
What are the components of a Financial Plan?
• Goals
• Net Worth Statement
• Budget
• Insurance Plan
• Savings Plan
• Investment Plan
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Benefits of Having a Financial Plan—Which one(s) do you think is most important?
• You have more money and financial security.
• You know where to use money to achieve your goals.
• You have less chance of going into debt you cannot handle.
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
The Five-Step The Five-Step Financial Financial Planning Planning ProcessProcess
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NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
STEP 1STEP 1
Set SMART Set SMART GoalsGoals
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Cheshire Cat, Cheshire Cat, Alice In Alice In WonderlandWonderland
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
WANTS VS. NEEDSWANTS VS. NEEDS
These are issues that will These are issues that will affect this stepaffect this step
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Needs vs. Wants Activity
• Clothing (basic)• Going to the movies• Going out to eat• Place to live
(shelter)• A vehicle• A computer
• An I-POD• Going to a basketball game• Food• Cell phone• Cable television• Designer clothing
Directions:Directions:Stand upStand up if this is a if this is a needneed for you. for you.Sit down Sit down if this is a if this is a wantwant for you for you..
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Values
Values strongly influence our spending habits. We don’t usually spend our money on things we do not feel are important.
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Examples of ValuesExamples of Values
• Getting a good educationGetting a good education
• Religious faith or beliefsReligious faith or beliefs
• Social causesSocial causes
• Handling money responsiblyHandling money responsibly
• Friendships/The people I hang out withFriendships/The people I hang out with
• ________________________________________________________
• ________________________________________________________
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NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Term GoalsTerm Goals• Incidental GoalsIncidental Goals
– Stepping stones to short-term Stepping stones to short-term goalsgoals
• SHORT-TERM GOALSSHORT-TERM GOALS
–Within three monthsWithin three months• INTERMEDIATE-TERM GOALSINTERMEDIATE-TERM GOALS
–Three months to a yearThree months to a year• LONG-TERM GOALSLONG-TERM GOALS
–More than a yearMore than a year1-E1-E
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Instant vs. Delayed GratificationInstant vs. Delayed GratificationExamples of Examples of DelayedDelayed Gratification Gratification
• Saving money over time to make a major Saving money over time to make a major purchase.purchase.
• Waiting to buy a new product until the Waiting to buy a new product until the price goes down.price goes down.
• Waiting to see the latest movie until the Waiting to see the latest movie until the crowds get smaller and the lines shorter.crowds get smaller and the lines shorter.
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NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
S-M-A-R-TS-M-A-R-T GOAL CRITERIA GOAL CRITERIASSpecificpecific
MMeasurableeasurable
TTime-Limitedime-Limited
RRealisticealistic
AAttainablettainable
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NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
STEP 2STEP 2
Analyze Analyze InformationInformation
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Cash Flow
A measure of the money you receive and the money you spend.
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Spending Spending RecordRecord
$35.00$35.00
$5.00$5.00
$15.00$15.00
$6.00$6.00$4.0$4.0
00$7.00$7.00
$8.00$8.00$15.00$15.00
$40.00$40.00$55.00$55.00
$15.00$15.00
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NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
STEP 3STEP 3
Create a Create a Plan Plan
(Decide)(Decide)
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Decision Making
The process of considering and analyzing information in order to make a decision.
What about What about you?you?
Factors That AffectFactors That AffectDecision MakingDecision Making
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WantsWants
FamilyFamily
ValuesValues
TimeTimeMoneyMoney
NeedsNeeds
HabitsHabits
MotivationMotivation
EducationEducation
AgeAge
AttitudesAttitudes
SocietySocietyCultureCulture
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Opportunity Cost
• Choosing one option may mean giving up altogether another goal. It’s a tradeoff!
• Personal example: Concert vs. Algebra Test
• Financial Example: $129 pair of shoes vs. saving
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
EvaluateEvaluateResultsResults
Decision-Making ProcessDecision-Making Process
Make a DecisionMake a Decision
Identify YourIdentify YourGoalGoal
Examine OptionsExamine Options
EstablishEstablishCriteriaCriteria
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Weigh ProsWeigh Prosand Consand Cons
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
STEP 4STEP 4
Implement Implement the Planthe Plan
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
RREALITYEALITYRecognize that unless you strike it Recognize that unless you strike it rich somehow, you’ll have limited amounts of time and rich somehow, you’ll have limited amounts of time and money to use. That’s the money to use. That’s the RealityReality..
RRESPONSIBILITYESPONSIBILITYIf you handle your money If you handle your money wisely, you can do a lot of good for yourself and others. On wisely, you can do a lot of good for yourself and others. On the other hand, it’s your own fault if you blow it. That’s the the other hand, it’s your own fault if you blow it. That’s the ResponsibilityResponsibility. .
RRESTRAINTESTRAINTRemember the idea of delayed Remember the idea of delayed gratification? You show gratification? You show RestraintRestraint when you have the when you have the self-control to save your money for a future goal instead of self-control to save your money for a future goal instead of spending it now. spending it now.
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NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
SSAVINGAVINGSSPENDINGPENDINGSSHARINGHARING
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NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
STEP 5STEP 5
Monitor & Monitor & Modify the Modify the
PlanPlan
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
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?
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins
Unit 1: Your Financial Plan:Unit 1: Your Financial Plan:Where it All BeginsWhere it All Begins