Personal Finance 1.02 PPtA


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Personal Finance 1.02 PPtA

  1. 1. Essential Standard 1.00: Understand economic activities of individuals and families. Objective 1.02Understand characteristics of financial goals, steps in decision making and factors that affect financial decisions.
  2. 2. Essential Questions What are the steps in goal setting and decision making? How do individuals needs, wants, values, standards, and priorities affect financial goals and decisions?
  3. 3. FINANCIAL GOALS  Financial Goals Financial goals should be SMART: are  Specific accomplished  Measurable through and give  Attainable direction to  Realistic financial  Time-bound planning. Learning to set financial goals is an important part of learning to live
  4. 4. Decision Making Steps 4. Identify the pros and1. Identify the problem & cons of each option decision to be made 5. Choose the best2. Identify resources and option gather information 6. Put the decision into3. Identify the options action..just do it! (alternatives) 7. Evaluate the *team members outcomes of the brainstorm decision
  5. 5. Six Steps in Economic Decision- Making Process Do the Positives (+) outweigh the Negatives (-)? + Disadvantages Advantages Use T-account to determine positives and negatives Good Decision/Bad Decision5
  6. 6. Good Decision Making Following logical  Good decisions lead steps when making to the achievement decisions helps of goals and a feeling individuals make of self-control and informed choices. self-confidence. When decisions are  Good decisions are a made from habit or on key to successful impulse, there is a independent living. greater likelihood of  Who makes those negative outcomes. decisions?  Be sure YOU are making the best decisions!
  7. 7. FACTORS THAT AFFECT FINANCIALDECISIONS  Family factors  Technology  Cultural factors  The media  Social factors  The marketplace  Societal and  Legal and moral demographic factors factors  Economic factors  Personal factors  Steps in Decision Making
  8. 8. Personal Factors Breakdown Needs and wants  Distinguishing wants from needs helps individuals and families set more realistic goals and make better decisions. Values  Understanding and prioritizing values helps individuals and families set goals and make decisions that lead to greater personal satisfaction. Standards --- Measures of quality or excellence  With regard to standards for success, individuals have different views of what it means to be successful. Priorities  Each individual or family needs to set priorities by deciding what is more important at any point in time.
  9. 9. Principles of Financial Planning from the Jump$tart Coalition Classify the 12 Money doubles by the “Rule of 72” Your credit past is your credit future Start saving young Stay insured Budget your money Don’t borrow what you can’t repay Map your financial future Don’t expect something for nothing High returns equal high risks Know your take-home pay Compare interest rates Pay yourself first$_Cale ndar.pdf
  10. 10. Factors AffectingDecisions Family structure Income level Lifestyle Size Age Stage of life cycle Health status Emergencies
  11. 11. Cultural factors Cultural and ethnic groups impact  Values  Beliefs  Lifestyle  Family structures  Clothing choices What are the advantages and disadvantages of cultural diversity within a family, a school, a workplace, a community?
  12. 12. Social factors  Education level  Family structure  Immigration  Ethnicity  Rural, urban, suburban community  Peer pressure  Community relationships and involvement
  13. 13. Societal and DemographicFactors Demography is the statistical characteristics of a population  Age  Sex  Race  Birth, marriage, death rates  Where people live
  14. 14. Economic Factors Employment rate  Kind and number of jobs available Inflation  A period of rapid increase in the price of goods and services Recession  An extended period of slow economic growth * Review the Business Cycle-prosperity, recession, depression, recovery Government Regulations & Spending  Fiscal policies affect personal & business spending Cash for clunkers, stimulus $, tax rates
  15. 15. Technology The use of mechanical or electronic devices to manipulate  Information (Computers, Ipads, Fax machines, fiber optics, GPS systems, smart phones)  Objects (i.e Robots, automated assembly lines, hybrid cars) On going change impacts  Training needs  Replacing obsolete technology  Types of jobs available
  16. 16. The Media Impacts the ways people and businesses communicate and operate locally, nationally, and globally. Communications that reach large audiences with the aid of publication devices that include  Internet  Television  Voice, text, & data transmissions  Publications
  17. 17. The Marketplace Supply  Goods and services available to the consumer Demand  Consumer desire to purchase as compared to availability Market response  How quickly the market adjusts to supply versus demand
  18. 18. Legal and Moral Factors Laws that impact spending  Taxation  Investment and Retirement Accounts  Insurance requirements Beliefs in what is right and wrong  What is appropriate behavior of employers, employees, and individuals at home, work, and within the community.  Charitable Giving and Community Service
  19. 19. Personal Factors Needs  Items to survive – food, clothing, & shelter Wants  Not essential but desirable – cell phone, Music CDs, Values  A person’s belief about what is important and desirable