Friday

1. Friday • Complete your Academic Integrity worksheet • Attach cover questions to your answers • Place in to be graded folder • Open a blank Word document and type your name and wait for further instructions

3. First Day • Under the HPREG network • Under your name • Under Documents • Create a 2013-14 Folder *if you do not already have one • Create another folder called: • Personal Finance • Open Personal Finance folder • Folder called: Chapter Notes & Do Now • Folder called: Study Guides • Folder Called: Test • Folder Called: Quiz • Folder Called: Project

4. DNC3 (means Do Now Chapter 3) • Open Word • Name, Date DNC3 • Answer the following Do Now • Save As: DNC3 • In your Notes & Do Now Folder Create a subfolder called Do Now: Open your Do Now folder and save as • C3DN: What is the goal of creating a budget for yourself?

5. Personal Financial Planning Chapter 3 • Why is it important to learn now how to plan for your financial future?

6. Personal Financial Planning Chapter 3 • personal financial planning • goals • values • liquidity • service • good • consumer • interest • time value of money • principle • future value • annuity • present value

7. Personal Financial Planning Chapter 3 The financial planning process can help you reach your financial goals.

8. Personal Financial Decisions • What are the benefits of financial planning? • What is personal finance? • Everything in your life that involves money • Personal financial planning is arranging to spend, save, and invest money to live comfortably, have financial security, and achieve your goals

9. Goals • What is a goal? • The things you want to accomplish • Everyone has different goals • What are some of yours?

10. Personal Financial Planning Chapter 3

11. DNC3 • Open your Do Now from last week, tap enter two times, enter today’s date and answer the following Do Now: • What are the 4 steps in setting a financial goal?

12. Personal Financial Planning Chapter 3 Section 1 Financial Decisions and Goals • Define personal financial planning. • List the six steps of financial planning. • Identify factors that affect personal financial decisions.

13. Personal Financial Planning Chapter 3 Section 1 Financial Decisions and Goals Personal Financial Decisions PersonalFinancial Planning Your Goals personal financial planning arranging to spend, save, and invest money to live comfortably, have financial security, and achieve goals goals the things one wants to accomplish

14. Personal Financial Planning Chapter 3 Section 1 Financial Decisions and Goals Personal Financial Decisions Benefits of Planning Increased effectiveness in managing financial resources Debt avoidance and reduced dependence on others Improved personal relationships A sense of freedom from financial worries

15. Personal Financial Planning Chapter 3 Section 1 Financial Decisions and Goals Personal Financial Decisions—Step 1 Determine Your Current Financial Situation Savings Monthly Income Monthly Expenses Debts

16. Personal Financial Planning Chapter 3 Section 1 Financial Decisions and Goals Personal Financial Decisions—Step 2 Develop Your Financial Goals Do your personal values affect your financial decisions? Think about your financial goals What are your needs? What are your wants? values the beliefs and principles you consider important, correct, and desirable

17. Personal Financial Planning Chapter 3 Section 1 Financial Decisions and Goals Personal Financial Decisions—Step 3 Identify Alternative Courses of Action Continue the same course of action Expand the current situation Change the current situation Take a new course of action

18. Personal Financial Planning Chapter 3 Section 1 Financial Decisions and Goals Personal Financial Decisions—Step 4 Evaluate Your Alternatives • The Internet • Financial Institutions • Media Sources • Financial Specialists Sources of Financial Information Consequences of Choice • Inflation Risk • Interest Rate Risk • Income Risk • Personal Risk • Liquidity Risk Evaluating Risks liquidity the ability to easily convert financial assets into cash without loss in value

19. Create and Use your Financial Plan of Action—Step 5 • Goal? Increase saving—then being to save • Goal? Pay off a loan—begin to pay it off • Goal? Increase income—new job, promotion, continue education

20. Personal Financial Planning Chapter 3 Section 1 Financial Decisions and Goals Developing Personal Financial Goals—Step 5 Short-Term Goals Intermediate Goals Long-Term Goals One year or less Two to five years More than five years Risk Graph

21. Review and Revise – Step 6 • Review and Revise your Plan • As you get older, things change • You plan will need to change • Economy changes • You may need to reevaluate your decisions

22. TUESDAY--DNC3 • Open your Do Now from yesterday • Tap enter 2X • Today’s Date • Answer the following do now: • List one benefit of financial planning

23. Personal Financial Planning Chapter 3 Section 1 Financial Decisions and Goals Developing Personal Financial Goals Service Good service a task that a person or machine performs for you good physical item that is produced and can be weighed or measured

24. How you reach your goal • Tangible and intangible • Consumable good • Durable Good • Intangible

25. Personal Financial Planning Chapter 3 Section 1 Financial Decisions and Goals Developing Personal Financial Goals Tips for Setting Your Financial Goals Be realistic Be specific Have a cleartime frame Know what type of action to take

26. Personal Financial Planning Chapter 3 Section 1 Financial Decisions and Goals Influences on Personal Financial Planning LifeSituations PersonalSituations EconomicFactors

27. Personal Financial Planning Chapter 3 Section 1 Financial Decisions and Goals Influences on Personal Financial Planning Economic Factors MarketForces FinancialInstitutions Global Influences

28. Personal Financial Planning Chapter 3 Section 1 Financial Decisions and Goals Influences on Personal Financial Planning Economic Conditions ConsumerPrices ConsumerSpending InterestRates consumer a person who purchases and uses goods or services interest the price that is paid for the use of another’s money Activity A & Activity B

29. Review Section 1 • What are the benefits of financial planning? • What is the 6 step process? • What are influences on Personal Financial Planning?

30. Introduction to Excel • What is Excel? • What do we use it for?

31. Wednesday C3DN—Section 2 • Give an example of one tangible good and one intangible • SGO #1 Personal Finance

32. Personal Financial Planning—End of Section 1 Chapter 3 Tuesday: Section 1 Financial Decisions and Goals • C3DN: Tuesday • Often people with conflicting financial values and practices experience challenges in their business or personal relationships. • How could such problems be minimized or prevented using what you have learned in this chapter so far?

33. Personal Financial Planning Chapter 3 Section 2 Opportunity Costs and Strategies • Explain the opportunity costs associated with personal financial decisions. • Understand the time value of money. • Identify eight strategies for achieving financial goals at different stages of life.

34. Personal and Financial Opportunity Costs • Can most of us have ANYTHING we want ANYTIME we want it? • So we have to make choices • When we make a choice to have one thing we have to give up something else • Either personally • Or Financially • We must WEIGH one against the other • Example: Study for test or go to concert? • Might be someone or a group you have wanted to see for a really long time • Might fail test if you do not study

35. Personal Financial Planning Chapter 3 Section 2 Opportunity Costs and Strategies Personal Opportunity Cost Personal Resources Require Management Health Knowledge Skills Time Do you eat correctly for your health? Get enough sleep? Study correctly? Improve your skills? Plan your time correctly?

36. Financial Opportunity Cost • Financially we have to make choices • Financial Opportunity Cost • Give up one thing to have another • To help us make those decisions we must consider the “Time Value of Money”

37. Personal Financial Planning Chapter 3 Section 2 Opportunity Costs and Strategies Financial Opportunity Cost To help make choices, consider the time value of money. time value of money the increase of an amount of money due to earned interest or dividends • Every time we want to spend $ we must consider time value of money • Do we save and get interest or buy those sneakers for $200

38. Personal Financial Planning Chapter 3 Section 2 Opportunity Costs and Strategies Financial Opportunity Cost Calculating Interest Principal x Annual Interest Rate = Interest principal the original amount of money on deposit

39. Calculating Interest • Calculate time value of your savings by figuring how much interest you will earn • Need to Know: • Principal (original amount of money in deposit) • Annual interest rate • Length of time in account • Principal x annual interest rate = interest earned

40. Wednesday DNC3 • What does the time value of money mean?

41. http://video.about.com/math/What-Is-Simple-Interest-.htm Simple Interest Simple interest—you only earn interest on the amount of your investment (your principal) • Interest—What you earn by allowing the bank to use your $ • Principal – The amount of money deposited • Rate—The amount paid on each dollar saved during the time period • Time- The number of years or months you keep your $ in the bank • Formula: (P)$1,000 X (R).03x(T)1year = $30 (Annual Interest – after 1 year) C3 Simple Interest Sheet

42. Simple Interest per month & not per year • 7 months needs to be converted to 7/12 • .58 • So if you borrow $1,000 (P) x 3% or .03 (I) x time 7/12 or .58 = • 1000 x .03 x .58= $17.4 Simple Interest Worksheet alone

43. Personal Financial Planning Chapter 3 Section 2 Opportunity Costs and Strategies Financial Opportunity Cost Calculating Future Value Multiply the principal by the annual interest rate and then add that interest amount to the principal. future value the amount an original deposit will be worth in the future based on earning a specific interest rate over a specific period of time—ALSO called Compounding

44. Simple Interest vs Compound Interest • Your money increases faster over time • Future value of a SINGLE deposit • Deposit $1,000 at age 40 at 5% simple interest at age 65 you will have $1,250 in simple interest • You are depositing your money for 25 years (65-40) • 10000 X .05 X 25 = $1,250 in interest gained • VERSUS

45. compound Interest • If you deposit $1,000 at age 40 at 5% compound interest at age 65 you will have $3,387 in interest • (you start each new year with a new balance which includes the interest you have gained) • EX: 1,000 x .05 = 50 • 1050 x .05 = $52.50 ( and it keeps going—COMPOUNDING) • Your interest gets interest! • You have earned an EXTRA $2137.00 in FREE MONEY! • $3,387-$1,250=$2,137 extra

46. Each year interest is earned on your principal • Example of compound interest : • YEAR 1: (P) $1,000 x (R) .05 x 1 (1st year) = $50 • YEAR 2: (P + Interest earned) 1050 X .05 x=$52.50 so you have $1050 + 52.50 = $1,102.50 • Year 3: $1,102.50 * .05= $55.13 so after year 3 you have $1,102.50 + 55.13 = $1,157.63 • FORMULA: • (Principal = Previously Earned Interest) X Annual Interest Rate = Interest Earned for the Second Year and on and on

47. Future Value of A Single Deposit of $1(page 77 &78 • Deposit $1 at 7% interest for 7 years, what would I have? • First find the annual interest rate (75) • Then Find the # of years (7) • You would have $1.60 (60 cents FREE) • EX: If you deposit $1 in a 7% account, at the end of year 7, you would have $1.61 • The table is on page 79 Compound Interest Worksheet w/banks Board Example Excel Example

48. Thursday C3DN • How do you calculate Simple Interest? (What is the formula) Excel Example Compound Interest Worksheet w/banks

49. C3DN - Friday • What is Future Value?

50. Study Guide C3 Version 2 Interest worksheet • Google: Search: savings bank interest rate comparison • Complete the chart attached • Find 5 banks and 2 savings accounts at each bank • You DO have to search to find the results for these • Look at example attached • *Finish for homework