Unit 1: Financial plan

Unit 1: Financial planNEFE High School Financial Planning Program

Most people dont plan to failThey simply fail to plan!WantsHave your parents ever refused to buy you some things you really wanted?New clothesTickets to a showLatest electronicsMaybe you just didnt have enough money to buy these items yourself

Sample Wants and NeedsNEEDSFood for breakfastClothes for schoolTransportation to school or workA place to live____________________________

WANTSAn iPodVideo gameCell phoneHot carA mansion____________________________What Are Your Goals?

Make a list of all the goals you have for yourself you have one minuteNarrow this list down to six goals you have 45 secondsNow pick your top three goals you have 20 secondsLast time, pick your number one, top goal you have 10 secondsFinancial PlanningA process of:Setting goalsDeveloping a plan to achieve your goalsPutting the plan in actionCreating a roadmap for everything you do with your moneySpendingSavingUsing CreditInvestingPurpose of Financial PlanningTo live comfortablyBuy things without getting stressed outThings that you needThings that you want

5 Steps of Financial PlanningSet SMART GoalsSpecificProvide the detailsMeasurablePut a price on itAttainableWithin reachRealisticPracticalTime BoundClear time frameAnalyze informationCreate a planImplement the planMonitor and modify the plan

Two Teen MillionairesMeet Cameron and AshleyTwo teens who set goals and made millions

Step 1: Set SMART Financial GoalsBegin with an end in mindVisualize a picture of your desired outcomeSet priorities in order to make good choicesShould be meaningfulWrite them downConsider needs and wantsNeedsBasic things that we must have to surviveWantsThings that make life more funCan live without themSMART GoalsAre your goals SMART?RealisticI want to be a millionaire in two yearsI want to lose ten pounds in a weekAttainableAre these two goals attainable? Can we reach these goals during our time frame?

Examples of SMART GoalsS - SpecificI want to go to Bermuda on vacation this summerM MeasurableI will need a total of $2,400A AttainableI will need to save $400 a month for six monthsR RealisticList how you can do thisI will cut back on going out to eat for lunchI wont go to the moviesI will save my birthday moneyI will only buy gifts for my friends that are on saleExamples of SMART Goals (continued)R NOT RealisticI will save my entire paycheck each weekThis means you will not pay your cellphone bill, your car insurance and you wont buy gas for your carThis is NOT realisticYour plan needs to be Realistic if it isnt you wont reach your goalT TimeI will need to save by July 2012 in order to plan for an August 1st trip

Step 1: Set SMART Financial Goals(Continued)Needs and Wants are affected by your ValuesBeliefs and practices in your life that are very important to youInfluenced by many factors such as family, friends, your way of life, education, and life experiencesGoalSomething that you aim for in your life and gives you directionset financial goalsTime frames for goals:Short-term: accomplish within 3 monthsIntermediate: accomplish within 3 months to 1 yearLong-term: take longer than 1 year to accomplishDelayed GratificationGiving up something now to get something better later

14Step 2: Analyze Your InformationTake a look at your Cash FlowAmount you receive or earnMoney you get from allowance, a part-time job, a gift, etc.Amount you are spendingAmount you are savingCommon dilemmaNeed to save more than you receive or earn

Step 3: Create a Plan(Your Financial Roadmap)Items that can affect your spendingSpending logValuesHabitsOpinions of family and friendsOnline activityAdvertisements

Are you an Oscar or a Felix?It is said that we have both an Oscar and a Felix living inside our brains. Oscar, similar to the Oscar in The Odd Couple, is unstructured, reactive, driven by whims, and lives by the credo, rules are made to be broken.Felix, on the other hand, loves lists, sets goals, and plans everything he does. He lives by the clock and never deviates from his rules.When it comes to working with numbers, who rules your brain Oscar or Felix? Why?

Step 3: Create a Plan (Continued)(Your Financial Roadmap)Six Steps in the Decision Making ProcessIdentify your GoalEstablish Criteria (helps to eliminate choices)What?When?How much are you willing to spend?Examine your OptionsBrands, features, capabilitiesWeigh the Pros & ConsMatch your options with your criteriaMake your DecisionWhich option best meets your criteria?Evaluate ResultsAnalyze and reflect

Key Terms Related to the Decision Making ProcessOpportunity CostThe value of what is given up when you select one option over another optionSatellite DecisionsSmaller decisions that can result from a major decision

Step 4: Implement the PlanBe a responsible spenderAccountable for your decisions and actionsGuidelines for sticking with your planWrite your goals on an index cardPost the card somewhere visibleDiscuss your goals with someonePrior to making a purchase, decide how much you are going to spend in advance so you do not spend moreStep 5: Monitor and Modify the PlanMonitor your plan once or twice per month to stay on trackMake any necessary adjustmentsUnexpected instances or expensesChange in goalsResources changeLife changes

Take the Time to Create a Financial Plan