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E High School Financial Planning Program E High School Financial Planning Program One - Your Financial Plan: Where It All Begins Good Morning! Objective: Define the purpose of Decision Making and creating a Financial Plan Do Now: Complete the SMART Goals handout To Be Discussed

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Good Morning!. Objective : Define the purpose of Decision Making and creating a Financial Plan Do Now : Complete the SMART Goals handout To Be Discussed. Set Goals. Identify Your Goal. Analyze Information. Establish Criteria. Create a Plan. Weigh Pros and Cons. - PowerPoint PPT Presentation

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Page 1: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Good Morning!Objective:

Define the purpose of Decision Making

and creating a Financial Plan

Do Now:

Complete the SMART Goals handout

To Be Discussed

Page 2: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

The Decision- Making The Decision- Making ProcessProcess

EvaluateEvaluateResultsResults

Make a DecisionMake a Decision

Identify YourIdentify YourGoalGoal

Weigh Pros Weigh Pros and Consand Cons

EstablishEstablishCriteriaCriteria

Monitor & ModifyMonitor & Modifythe Planthe Plan

Implement Implement the Planthe Plan

Set GoalsSet Goals

Create a PlanCreate a Plan

AnalyzeAnalyzeInformationInformation

The Financial The Financial Planning ProcessPlanning Process

Decision Making and Financial PlanningDecision Making and Financial Planning

1-L1-L

Page 3: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Alternatives

Consequences

Opportunity Cost

Risk

Financial Planning also means....Decision Making…

Page 4: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

You Know What You WantYou Know What You Want

1-M1-M

In order to make a good decision you must be informed…..In order to make a good decision you must be informed…..

What is What is opportunity costopportunity cost??

A possibility that you give up whenA possibility that you give up whenyou make one choice insteadyou make one choice insteadof anotherof another

Page 5: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Opportunity Cost“Consequences of Choices”

**A Trade off…...

**Refers to what you give up when a decision is made or the cost of giving up one thing in order to get something that you want more;

**The cost may involve your time, money, and/or effect

Page 6: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Examples

Personal: For example time spent on studying usually means lost time for hanging out with your friends

Financial:For example, the purchase of an item with money from your savings means your will no longer earn interest on that money

Page 7: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Consequences

**Outcomes or results of a decision;

**What will happen depending upon what you choose to do;

**These are determined by your actions or lack of actions

Page 8: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Alternatives

**Choices….

**Different ways to solve a problem;

**Opportunities to choose between several courses of action

Page 9: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Risk

**The possibility that your decision will result in a negative outcome;

**Taking a chance;

**Risk may involve losing money

Page 10: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Risk

1) Inflation Risk2) Interest Rate Risk3) Income Risk4) Personal Risk5) Liquidity Risk

Page 11: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Inflation Risk

Inflation is the rise in the level of prices

for goods and services over time

Inflation Risk: If you wait to buy a caruntil next year, you accept the

possibilitythat the price may increase

Page 12: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Interest Rate Risk

Interest is the price that is paid for theuse of another’s money

Interest Rate Risk: Interest rates go up

and down, which may affect the cost of borrowing or the profits you earn when

yousave or invest

Page 13: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Income Risk

Income Risk – you may lose your job due

to unexpected health problems, familyproblems, an accident, or changes in

your field of work

Prepare and save – build up 3-4 months of

savings to cover cost of living

Page 14: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Personal Risk

Personal Risk – Driving for eight hours on icy mountain roads may not be worth the money youwould save on airfare.

Page 15: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Liquidity Risk

Liquidity is the ability to easily convertyour financial resources to cash without aloss in value

Liquidity Risk: Some long-term investments,

such as a house or an antique doll collection,

can be difficult to convert to cash quickly.

Page 16: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

Other InfluencesOther Influences

Page 17: Good Morning!

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit One - Your Financial Plan: Where It All Begins

People

OtherPublications

Agencies

Magazinesand

Books

The Facts of the Matter…Find Advice; Find Information To make a good choice equals…

Internet

Wrap up on NBK