Focus on Personal Finance Personal Financial Planningin Action Chapter 1
Focus on Personal Finance Objectives Identify social and economic influences on personal financial goals and decisions Develop personal financial goals. Assess personal and financial opportunity costs associated with financial decisions Implement a plan for making personal financial and career decisions
Focus on Personal Finance Lesson 1: Making Financial Decisions
Advantages of Personal Financial Planning Increased effectiveness in obtaining, using and protecting financial resources Increased control of your financial affairs Improved personal relationships A sense of freedom from financial worries Focus on Personal Finance
Focus on Personal Finance Factors in Financial Planning Decision Making Life situation Economy Financial Planning Activities
Focus on Personal Finance Life Situation Adult lifecycle stage Age Marital status Number and Age of household members Employment Situation Major events Graduation, marriage, children, retirement etc. Values or what is important to you
Focus on Personal Finance Economy The economic environment Institutions, principally business, labor and government that work together to satisfy our needs and wants. Federal Reserve Bank (The Fed)- Is our nation‘s central bank and very important in our economy Is concerned with maintaining an adequate money supply by influencing: Borrowing Interest rates Buying and selling government securities
Focus on Personal Finance Economy cont’d Global Influences Imports vs Exports Inflation- the rise in the general level of prices Buying power of the dollar decreases Interest rates represent the cost of money
Focus on Personal Finance Financial Planning Activities Obtaining-receipt of income and other financial resources Planning-actions to determine future directions Saving- set aside funds for expected and unexpected expenses Borrowing-appropriate use of short-and long-term credit plans
Focus on Personal Finance Financial Planning Activities cont’d Spending- analysis of purchasing decisions for wise money use Managing Risk-insurance and other methods to reduce financial uncertainty Investing-accumulation of funds for long-term financial security Retirement and Estate Planning-efforts to provide for post-career years and transfer of assets
Focus on Personal Finance Lesson 2: Developing and Achieving Financial Goals
Focus on Personal Finance Type of Financial Goals Short-term- achieved in next year or so Intermediate goals- achieved in 2-5 years Long-term goals-plans more than 5 years off
Focus on Personal Finance Goal Setting Guidelines Goals should be realistic Goals should be stated in specific terms Goals should have a time frame Goals should indicate the action to be taken Discuss some of your goals
Focus on Personal Finance Lesson 3: Opportunity Costs and the Time Value of Money
Focus on Personal Finance Personal Opportunity Cost Opportunity Costs- what a person gives up to make a choice Personal Costs time used for one activity cannot be used for another Financial Costs Saving or investing a dollar instead of spending results in a future amount greater than a dollar. Current needs can make spending worthwhile but future interest earned is foregone.
Focus on Personal Finance Time Value of Money TVM- The increases in an amount of money as a result of interest earned.
Focus on Personal Finance Simple Interest Amount in savings x annual interest rate x time period equals the interest.$100 x 5% x 1 (1 year) 100 x .05 x 1 = $5.00In one year you have $100 in principle plus $5.00 in interest for a total of $105 at the end of the year.
Focus on Personal Finance Future Value Future value is the amount to which current savings will increase based on a certain interest rate and a certain time period. Future value is also call compounding - earning interest on previously earned interest. Future value can be computed for a single amount or for a series of deposits.
Focus on Personal Finance Present Value The current value for a future amount based on a certain interest rate and a certain time period. Present value calculations are also called discounting. The present value of the amount you want in the future will always be less than the future value. Present value can be computed for a single amount or for a series of deposits.
Focus on Personal Finance Lesson 4: A Plan for Personal Financial Planning
Focus on Personal Finance A Plan for Personal Financial Planning
Focus on Personal Finance Lesson 5: Career Choice and Financial Planning
Focus on Personal Finance Career Planning Process Personal assessment Employment market analysis Application process Interview process Employment acceptance Career Development and Advancement
Focus on Personal Finance Identify Career Trends Print and other media sources such as the Occupational Outlook Handbook Online sources are available of all aspects of career planning Informational interviews- A planning discussions with a person in a field of interest
Focus on Personal Finance Obtain Employment Experience Part-time employment Volunteer work Internships Campus projects
Focus on Personal Finance Identifying Job Opportunities Job advertisements Career fairs Employment agencies Business contacts Job creation Other job search sources
Focus on Personal Finance Resumes Present in a professional manner Limit to one page (use more pages only if you have enough valid information) Use action words to demonstrate accomplishments Foreign language skills, computer experience, research experience, overseas study, team projects, flexible, achievement
Focus on Personal Finance Cover Letters Introductory paragraph gets readers attention. The development paragraphs highlights aspects of your background that qualify you for position. The concluding paragraph should request action. Close by summarizing your benefits to the organization.