Introduction to personal finance

Why do we need to manage our money?

Today’s objective

Personal finance impacts whether or not people meet their personal goals.

What is personal finance?

- A personal finance plan includes financial goals and a budget, including spending on goods and services, savings and investments, insurance and philanthropy.

- More than budgeting, more than investing

- It is a thinking process; an on-going thinking process

Decisions, decisions- Your personal beliefs about money are major forces that

guide your spending decisions and goals.

- Personal finance is a roadmap in guiding you through your financial life.

- You need to consider your career, salary, budget, savings plan, retirement plan, and goals.

- It is never too early to start thinking about your personal finance goals!!!

How do I begin?- Think about a potential career and how you can obtain

that career

- Look at your current financial situation

- Develop financial goals

- Identify all of your options

- Evaluate alternatives

- Create and use a financial plan of actions

- Review, revise, review, and revise you plan (this happens periodically)

Determine your current financial situation

1. Determine your current financial situation

Make a list of items that relate to your finances:

- savings/investment

- monthly incomes (job earnings, allowance, gifts, interest)

- Monthly expenses

- Debts

Develop your financial goals

2. Develop your financial goals.

Consider your attitude toward money.

Ask yourself the following:

-How do I determine if it is more important to spend money now, or save it for the future?

-How do your personal values affect your financial decision?

Identify your options

3. Identify your options

-Continue the same course of action

-Expand the current situation

-Change the current situation

-Start something new

Evaluate your alternatives- Consider the risks and consequences of each decision

you make

- 1. Be aware of all sources of financial information

- 2. Evaluate consequences of choices, both good and bad.

- 3. Understand risks involved with choices

Create, review, and revise

Create and use your financial plan

Just do it!!!!!!Review and revise your plan

- As we get older and our circumstances, our finances, needs, and wants will change, therefore our financial plan must be flexible as well.

What influences your goals?- Our society

- Our culture

- Your emotions

- Financial resources

- Peer pressure (advertising for products, what you see others buy)

- Scarcity (not enough resources to fulfill our needs)

- Wants and Needs

Why Personal Finance goals are important?

- Good financial behavior reaps many benefits:

- Security

- Ability to achieve goals

- Less worry about finances

- If bad financial behavior occurs the following can happen:

- Bankruptcy

- Debt

- Job less

- Inability to pay bills