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Managing Personal Finances

Managing Personal Finances. Introduction to Business and Marketing. Objectives. Explain the steps involved in the financial planning process. Identify sources of financial information. Discuss sources of risk. Discuss the consequences of choices. The Main Idea.

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Managing Personal Finances

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  1. Managing Personal Finances Introduction to Business and Marketing

  2. Objectives • Explain the steps involved in the financial planning process. • Identify sources of financial information. • Discuss sources of risk. • Discuss the consequences of choices.

  3. The Main Idea • Financial planning provides a solid foundation for making financial decisions. It involves looking at your financial position and setting goals. • Read “Teach Your Teens Financial Responsibility”

  4. Making Financial Decisions • Personal financial planning will help you reach your goals • Includes spending, saving and investing your money in a way that provides enjoyment AND financial security

  5. Financial Planning Steps

  6. Step 1: Determine Your Financial Situation • Make a list to help you determine your financial situation • A good way to estimate your expenses is to carefully track them for one month My Financial Situation • Savings • Monthly Income • Monthly Expenses • Debts

  7. Step 2: Develop Your Financial Goals • Think about your attitude toward money • Do you want to spend money now or save for the future? • What are your wants and needs? • Do you want to get a job right after high school or continue your education?

  8. Step 3: Identify Possible Courses of Action • Consider your options before making a decision • Generally you will have several possible courses of action

  9. Step 4: Evaluate Your Alternatives • Use sources of financial information to help you evaluate your alternatives. • Consider the consequences and risks of each decision you make.

  10. Step 5: Implement a Financial Plan of Action • A plan of action is a list of ways to achieve your financial goals. • If your goal is to increase your savings, a plan of action could be to cut back on spending, or get a part-time job.

  11. Step 6: Review and Revise Your Plan • As you get older, your finances and needs will change. • You should reevaluate and revise your financial plan every year.

  12. Sources of Financial Information • The Internet • Magazines • Newspapers

  13. Understanding Risk • When you make a financial decision, you also accept certain risk.

  14. Minimizing Risk • Insurance can minimize risk by protecting investments like houses and cars • Diversification – spreading wealth out over different types of investments

  15. Consequences of Choice • An opportunity costis sometimes called a tradeoff. • It is whatever you give up when you make a choice

  16. Lawn and Order - Why its Important to Save • Debt of a Salesman - Debt and Borrowing Money

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