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Personal Financial Planning

Unit 1. Personal Financial Planning. Financial Plan. A plan that contains personal financial goals you want to accomplish. A formal process of looking at your current situation and thinking about your future. Will require long-term commitment.

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Personal Financial Planning

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  1. Unit 1 Personal Financial Planning

  2. Financial Plan • A plan that contains personal financial goals you want to accomplish. • A formal process of looking at your current situation and thinking about your future. • Will require long-term commitment. • As with any plan, you will put it into action and monitor it periodically.

  3. Financial Planner? • Some people will want to create their own plan and others may use a financial planner. • Financial Planner – Professional trained to provide advice about how to invest earnings, plan for retirement, and manage other financial matters.

  4. Goals Financial goals – specific objectives to be accomplished through financial planning Goal – the end result of something a person intends to acquire, achieve, do, reach, or accomplish sometime in the near or distant future Education goals - enable individuals to prepare for future success in the workplace

  5. Goals • Short-term goals – specified as less than one year • I plan to raise my English grade from a C+ to a B by the end of this school year by going to the writing lab and having my research paper reviewed prior to turning it in. • Long-term goals – specified as more than one year • By the end of the next summer year I would like to purchase my first car by saving $50 per month from my part time job.

  6. SMART Goals

  7. Education Goals • Help individuals prepare for success in the workplace • Examples include: • Earning an A on an upcoming quiz • Attending college • Participating in extra-curricular activities • Include both short-term and long-term goals • Provide guidance and direction • Enable individuals to reach financial goals

  8. SMART Goals

  9. SMART Education Goal • Goal – “I want to attend college.” • SMART goal – • Specific – I want to attend a four year college • Measurable – Because I want to attend a four year college, I will earn a B in algebra • Attainable – Because I want to attend a four year college, I will earn a B in algebra this semester • Realistic – Because I want to attend a four year college, I will earn a B in algebra this semester to prepare me for the college entrance exam • Time Bound – Because I want to attend a four year college, I will earn a B in algebra this semester to prepare me for the college entrance exam when I am a junior in high school

  10. SMART Financial Goals

  11. SMART Financial Goal • Goal – I want to buy a new car • SMART goal – • Specific – I plan to save for a down payment on a new car • Measurable – I plan to save $5,000 for a down payment on a new car • Attainable – I plan to save $5,000 for a down payment on a new car by saving $200 from every paycheck • Realistic – It is realistic to save $200 from each paycheck for a down payment on a car because I usually waste the money on unnecessary items instead of saving it • Time Bound – I plan to save $5,000 for a down payment on a new car by saving $200 from each paycheck for two years.

  12. What is Missing? • Find the missing element (specific, measurable, attainable, realistic, or time bound) in the following financial goals • Financial Goal #1 • As a senior in high school, I plan to save $5,000 for college living expenses in four years.

  13. What is Missing? • Financial Goal #1 Answer: Attainable

  14. What is Missing? • Find the missing element (specific, measurable, attainable, realistic, or time bound) in the following financial goals • Financial Goal #2 • I plan to save for a new computer by saving $150 each month for one year.

  15. What is Missing? • Financial Goal #2 Answer: Measurable

  16. What is Missing? • Find the missing element (specific, measurable, attainable, realistic, or time bound) in the following financial goals • Financial Goal #3 • I plan to save $2,500 by saving $105 each month for 2 years.

  17. What is Missing? • Financial Goal # 3 Answer: Specific

  18. What is Missing? • Find the missing element (specific, measurable, attainable, realistic, or time bound) in the following financial goals • Financial Goal #4 • I plan to save $1,500 to buy a used car by saving $75 from each paycheck

  19. What is Missing? • Financial Goal # 4 Answer: Time Bound

  20. What is Missing? • Find the missing element (specific, measurable, attainable, realistic, or time bound) in the following financial goals • Financial Goal #5 • I plan to save $2,000 to pay for a new computer by saving my whole paycheck for the next 6 months

  21. What is Missing? • Financial Goal # 5 Answer: Realistic

  22. Wrap Up • Your financial plan represents your personal financial goals at one point in time. • Those goals are likely to change over time. • For example, you may inherit money, or you may have a job opportunity overseas, or you may wish to spend more time on a hobby or a side business. • The financial plan is a work in progress; it is never finished. • As one goal is accomplished, another personal goal is defined.

  23. Your Personal Financial Plan • Beginning tomorrow you will write your own plan. • This project will give you the opportunity to think about your goals. • You will have 2 ½ days to complete this in the lab. • Next Monday and Tuesday we will present the plans to the class. • Thursday we will have our first quiz (25 questions).

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