Business and Personal Finance

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Business and Personal Finance
Chapter 1 Personal Finance Planning

• Section 1.1
• Decisions and Goals
• in Personal Finance

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Decisions and Goals in Personal
Finance
1.1

• In This Section . . .

What is personal finance planning? It means
spending, saving, and investing your money
so you can have the kinds of life you want
as well as financial security. This section
discusses

• Making Personal Financial Decisions
• Developing Personal Financial Goals
• Influences on Personal Financial Planning

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Decisions and Goals in Personal
Finance
1.1
What Youll Learn

• How to create a financial plan
• How to develop your financial goals
• How to evaluate the economic factors that
  will affect your financial decisions

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Decisions and Goals in Personal
Finance
Why Its Important
Learning the steps in the financial planning
process will give you a solid foundation for
making all your financial decisions, big and
small, now and in the future.
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Decisions and Goals in Personal
Finance
Video Clip Why Have a Financial Plan?
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Decisions and Goals in Personal
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1.1
Why Plan?
Some of the benefits of planning are

• You have more money, know how to use money to
  achieve your goals, and are financially secure
• You have less chance of going into debt you
  cant handle
• You can help your partner and support your
  children.

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Decisions and Goals in Personal
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1.1
Create a Financial Plan
The financial planning process has six steps
Step 1 Determine your current financial
situation Step 2 Develop your financial
goals Step 3 Identify alternative courses of
action Step 4 Evaluate your alternatives Step
5 Create and use your financial plan of
action Step 6 Review and revise your plan
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Decisions and Goals in Personal
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Common Cents Pay Yourself First
List your income (from your allowance or a
part-time job). Set an amount to put aside every
month and calculate how much you will save up in
a year.
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Types of Goals
Goals can be defined by the time it takes to
achieve them

• Short-term goals are those that youll reach in
  one year or less (saving to buy a computer).
• Intermediate goals take two to five years to
  reach (saving for a down payment on a house).
• Long-term goals take more than five years to
  reach (planning for retirement).

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Guidelines for Setting Goals
Your financial goals should

• be realistic
• be specific
• have a clear time frame
• help you decide what type of action to take

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Decisions and Goals in Personal
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Write it Down
Studies show that people who write down their
goals are three times more likely to achieve them.
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Decisions and Goals in Personal
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Influences on Personal Financial Planning
Many influences affect your day-to-day
decisions. The three most important are

• Life situations
• Personal values
• Economic factors

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Decisions and Goals in Personal
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Financial Goals and Activities for
Various Life Situations
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Decisions and Goals in Personal
Finance
Economic Conditions and Financial
Planning
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Decisions and Goals in Personal
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1.1

• Check Your Understanding

1) Name the six steps used to create a financial
plan. 2) What is the relationship between the
timing of your goals and the type of good or
service that you seek? 3) Describe two economic
factors that affect financial decisions. How
might these factors influence your financial
planning?
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Decisions and Goals in Personal
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• Think Critically

Why is it important to distinguish between your
needs and your wants?
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Decisions and Goals in Personal
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1.1
End of Section 1.1