What is Personal Finance?

1. What is Personal Finance?

2. True or False? • Teenagers get most of their money from part-time jobs • False: 55% of teens report getting money from parents/guardians; 43% from gifts; 28% from odd jobs; 25% from part-time jobs; 21% from allowance; 6% from a full-time job; 2% from their own business. (Teen Research, Inc.)

3. True or False? • Most teenagers who are 18 or 19 years old have a checking account • True. 64% of teens 18-19 years of age have a checking account. (Teen Research, Inc.)

4. True or False? • Ninety percent of high school students rely on their parents for information about money • True. (National Retail Federation)

5. True or False? • On average, American teens spend more than $100 billion a year • True. A recent survey showed that American teen spending exceeded $169 billion in one year. (Teen Research, Inc.)

6. How people under 19 spent their money in 2016

7. What is “Financial Planning”? A process of setting goals, developing a plan to achieve them and putting the plan into action

8. 5 Steps to Financial Planning • Why are the steps in the shape of a circle?

9. Step 1: Set Goals • Goal-setting should happen in three ways: • Short-term goals (within the next year) • Intermediate-term goals (1-5 years) • Long-term goals (5+ years) • Must distinguish between needs and wants. • For example, you need to eat, but you want to go out and eat pizza with friends. You need a place to live, but you want a TV in each room. You need to wear clothes, but you want designer jeans.

10. Goal Setting Write down 3 goals for each category. *Make sure they are appropriate to share, as you may be called on to share one of them. • Short Term Goal (next 12 months) • Intermediate Goal (next 1-5 years) • Long Term Goal (5+ years)

11. Step 2: Analyze Information • You must find out where your finances currently stand so you can see how much money you are receiving, spending, and saving. • Think about how much money you spend in a an average day or week. (cell phone, gas, food, Netflix, Starbucks)

12. Step 3: Make Decisions • Financial planning requires making many decisions, and making decisions about money can be particularly challenging because so many things come into play. • You must consider your personal spending record, as well as the many other things that can affect decisions—your mood, values, culture, habits, and opinions of your friends and relatives. So how do you decide?

13. Opportunity Cost- Review • When we make decision, we often make a choice between 2 things. This involves a trade-off that economists refer to as an “opportunity cost.” • The thing we don’t choose, or the decision we give up is the Opportunity Cost. EVERY DECISION has a cost. • Example: You and your best friend make plans for Friday night. You want to go see a movie but she wants to go bowling. You decide to go bowling. The opportunity cost of going bowling is not seeing a movie.

14. Step 4: Create and Implement a Spending Plan • Start with listing specific steps you should take and things you need to consider when creating your plan. • Be sure to consider ALL factors that will affect the plan and different strategies to help you stick to it.

15. Step 5: Monitor and Modify the Plan • Once you develop and implement a financial plan, remember to periodically check to make sure you are staying on track. • Plans are not necessarily set in stone. They will change with changes in priorities and criteria, and with unexpected events. When circumstances change, financial plans might as well.

16. Personal Finance Vocab • Gross Income-is the total amount of income from your wages/salaries before payroll deductions • Net Income- is the total amount of one’s income after payroll deductions are deducted (Take Home Pay) • Discretionary Income-money you have left after paying your essentials, such as rent, utilities, clothing, transportation, etc. • Payroll Deductions- are money subtracted from your gross income; the biggest deduction for most people are payroll taxes

17. Welcome to the MAGWEST Wedding Chapel!

18. Marriage Day * You can choose to stay single, but you have the same amount of work to do, without a partner 1. Chose or random draw for spouses. • IT DOESN’T MATTER WHO IT IS • If you don’t like your spouse selection- you can divorce, but you have an extra assignment to do. (paperwork and fees) 2. Random draw for job and salary 3. Kids- Roll the dice. 1stroll is # of kids, if the second roll is the same, you will have ZERO kids.

19. 1st Assignment First: Guys- Buy an engagement ring /wedding ring Ladies- Buy a wedding dress What’s the cost, give an explanation, where did you get it? Second: • Plan your wedding, reception and honeymoon. • If your single- you are taking a 2 week vacation. Where are you going? How much is it going to cost you to get there? How much is hotel? How much spending money do you need?

21. (Church)

23. Find a Car (or 2 if your family can afford it) • Cars.com, Automax.com, Truecar.com • Write down the make, model, year, and payment • Figuring your monthly car payment: • Total Cost of car minus down payment • Remainder divided by 60 months = monthly car payment • Car insurance will cost you 10% of your monthly payment Example: Cost of car= $25, 500- $2500 down payment = $23,000 left $23,000 divided by 60 payments = $383.33/month for 5 years Insurance cost = $38.33/month

24. Find a place to live No- you cannot live with relatives, friends, in your car, or outside. Find a ROOF. • Go to Apartmentguide.com • Find an apartment • Write down: • Address • # of bedrooms • Bills paid? • Monthly Rent