Objectives • Identify the components of a personal budget and strategies for staying within one’s budget • Describe the purpose for setting financial goals • Develop short-, mid-, and long-term financial goals • Evaluate the importance of financial planning
Key Vocabulary • Balance Sheet • Budget • Deficit • Discretionary Expenses • Discretionary Income • Financial Health • Financial Planner • Fixed Expense • Income • Inflows • Insolvency • Outflows • SMART goal • SMART strategy • Surplus • Take-home pay • Variable Expense
Needs vs. Wants • Divide the words into needs vs. wants • Which items are the most difficult to classify? Why? • Can an individual’s financial situation change her views of what is considered a need and what is considered a want? Explain. • Would you classify most of your own purchases as needs or wants? Explain
Needs vs. Wants • Do you purchase a new pair of basic shoes or the new Jordan’s for $150? • Wants change into needs • Want a car turns into need a car for work to provide for family/ self • Vary based on financial situation, family, religious, or cultural values
Simulation • Imagine that you are a single father running a computer repair business from your home. Refer back to your list of 25 words. How would your classifications of your needs and wants change based upon your life circumstances?
Financial Goals • Responsible money management can help you achieve your goals • Who would like to someday purchase a new car? • Who would like a new pair of shoes? • Who would like to purchase a computer?
Financial Goals • Refers to something, an item or product, that they want to buy or even a state of financial well-being that they hope to achieve. • List three financial goals that you have for the future.
Financial Goals • Short-term- within 1 year • Mid-term- 1-3 years • Long-term- More than three years • New shoes-short term • Buy special jewelry for you Mom’s 50th anniversary- mid-term • College tuition- long term • Retirement- long term
Financial Goals • Offers inspiration and motivation • Make goals specific and attainable • Flexible and realistic for your life
Financial Goals • Download: Reading- SMART Financial Goals • What does the acronym SMART stand for? • S • M • A • R • T
Financial Goals • Share one of your goals that you wrote from before • Take turns evaluating each other’s goal against the SMART criteria. Verbally discuss your goals and offer advice on specific changes in language that should be made • Compare your SMART goal with your original goal. In what ways will your new SMART goal be easier to attain?
Writing SMART goals • Download: Worksheet- Writing SMART Goals • Write your original goals out before SMART was introduced • Transform all three goals to SMART goals • Decide whether your goals are short, mid or long-term
Writing SMART goals • Long-term important to start early because usually their the most expensive • Organize income, expenses, and savings to achieve your goal
Introduction to Personal Budgeting • Download: Anticipation Guide- Budgeting • Contemplate the four statements, agree or disagree why? • Download: Reading- Budgeting • Review section headings and highlighted terms • Does reading change any of your answers?
Budgeting • Develop your taxonomies further but with terms about budgeting • 3 minutes by yourself • 3 minutes at your table • 4 minutes walking around the room
Budgeting • What information is needed to create a budget? • Accurate records of money in and money out • Keep financial documents • Receipts, paycheck stubs, tax forms, etc
Budget Analysis • Scenario cards passed out • Carefully read through the scenario • Underline sources of income • Circle all expenses • Download: Worksheet- Monthly Budget Example • You will not be using all of then columns and rows • Fill in the information specific to your scenario
Budget Analysis • What other financial information would have been helpful to complete the budget outline? • What seemed to stand out in your scenario? • Download: Directions- Budget Analysis Summary • How does the example reflect the specific requirements in the directions?
Budget Analysis • Pair up and share budget analysis • Download: Worksheet- Monthly Budget Example • Of the two scenarios, which financial situation would you most like to see yourself in? Why? • List one improvement that you would make for each financial situation
Budget Analysis • What are the most important principles of budgeting you learned that will help you to be successful in life? Explain your answers.
Enrichment • Give students the opportunity and experience to create a real budget. During the first class period, instruct students to track their spending for at least the next week and preferably longer. Students must be diligent and should track even the smallest of purchases. At the end of the time period, have students classify everything they purchased as a need or a want and create a personal budget based off of their findings.
Enrichment • Instruct students to research the career of a budget analyst, focusing on such aspects as job requirements and certifications, work environment, earnings, outlook, and companies that employ budget analysts. Students should present their findings to the class.
Cross-Curricular Integration • Social Studies: Compare and contrast different patterns of savings among various countries. Explain the variations.