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Unit One

Unit One. Financial Planning: Your Roadmap. What is Financial Planning?. Financial planning – the process of defining goals, developing a plan of action to achieve them, and putting the plan into action (ongoing, thinking process) Spending Credit Saving Investing.

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Unit One

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  1. Unit One Financial Planning: Your Roadmap

  2. What is Financial Planning? Financial planning – the process of defining goals, developing a plan of action to achieve them, and putting the plan into action (ongoing, thinking process) • Spending • Credit • Saving • Investing

  3. Financial Planning Process • Set goals • Analyze information • Create a plan • Implement a plan • Monitor and modify the plan

  4. Step 1 – Set Goals • Needs vs. Wants • Need – essentials, the basics of life • Food, clothing, shelter, water • Want – luxuries that increase quality of life You must know the difference between wants and needs and learn to prioritize because resources are limited

  5. Goals • Goal – a specific statement of what you want to achieve giving direction to your plan of action • Can be personal or financial • What you want out of life • Shows direction One of the most valuable things you can learn is to identify and write your goals clearly.

  6. Goal Setting • The process of deciding which needs or wants you want to pursue, based on your values and outside influences. SMART Goals • Specific • Measurable • Attainable • Realistic • Time-bound PAGE 5

  7. Goal Ranges • Short-term – less than 3 months • Focuses on immediate satisfaction • Intermediate (medium)-term – 3 months to 1 year • Long-term – more than 1 year of time Delayed gratification – A willingness to give up something now in return for something better later.

  8. Values • Value – a belief or idea that you consider important or desirable • Values influence the goals you set Examples: Earning good grades Being on time Telling the truth

  9. Step 2 – Analyze Information • Evaluate information about yourself • Income • Spending • Track your cashflow(a measure of the money you receive and the money you spend) • Personal Spending Record

  10. Step 3 – Create a Plan • Look at goals • Look at Personal Spending record • Time to make financial decisions and create a plan • Decision Making – the process of considering and analyzing information in order to make a decision.

  11. Decision Making Process • Identify the Goal • Gather Information • Analyze Outcomes Examine Alternatives • Make a Decision • Evaluate Results

  12. Decision Making The process of considering and analyzing information related to personal and financial goals to determine an action plan. • Satellite Decisions • Every decision made today affects decisions made in the future Choosing one option may mean giving up altogether on another goal. OPPORTUNITY COST – The value of what is given up when a person chooses one option over another.

  13. Factors InfluencingYour Decisions • Must know values and goals • Must be aware of culture or collective values – time, money, needs, wants, habits • Individual values will change over time – age, needs, wants

  14. Step 4 – Implement the Plan • Make it happen • Be responsible for your actions and decisions • 3 Rs of Money • Reality • Responsibility • Restraint

  15. Step 5 – Monitor andModify the Plan • You may need to change plan • Unexpected obstacles • Goals may change • Values may change • Resources may change

  16. THE END Financial planning -- making money work for you to let you lead the kind of life you want.

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