NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Unit 1 - 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

Unit 1 - Your Financial Plan:Unit 1 - Your Financial Plan:Where It All BeginsWhere 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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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.


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.


What are the components of a Financial Plan?

• Goals

• Net Worth Statement

• Budget

• Insurance Plan

• Savings Plan

• Investment Plan


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.


The Five-Step The Five-Step Financial Financial Planning Planning ProcessProcess

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STEP 1STEP 1

Set SMART Set SMART GoalsGoals


Cheshire Cat, Cheshire Cat, Alice In Alice In WonderlandWonderland



WANTS VS. NEEDSWANTS VS. NEEDS

These are issues that will These are issues that will affect this stepaffect this step


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..


Values

Values strongly influence our spending habits. We don’t usually spend our money on things we do not feel are important.


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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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


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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S-M-A-R-TS-M-A-R-T GOAL CRITERIA GOAL CRITERIASSpecificpecific

MMeasurableeasurable

TTime-Limitedime-Limited

RRealisticealistic

AAttainablettainable

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STEP 2STEP 2

Analyze Analyze InformationInformation


Cash Flow

A measure of the money you receive and the money you spend.


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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STEP 3STEP 3

Create a Create a Plan Plan

(Decide)(Decide)


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


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


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


STEP 4STEP 4

Implement Implement the Planthe Plan


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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SSAVINGAVINGSSPENDINGPENDINGSSHARINGHARING

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STEP 5STEP 5

Monitor & Monitor & Modify the Modify the

PlanPlan


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?


Unit 1: Your Financial Plan:Unit 1: Your Financial Plan:Where it All BeginsWhere it All Begins

Documents

NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Unit 1 - Your Financial Plan: Where It All Begins