HUSC 3366 Chapter 1 Personal Finance in Action

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Fundamentals of Family Financial Planning PowerPoint Lectures

Fundamentals of Family Financial Planning PowerPoint Lectures

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  • 1. Focus on Personal Finance
    Personal Financial Planningin Action
    Chapter 1
  • 2. 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
  • 3. Focus on Personal Finance
    Lesson 1:
    Making Financial Decisions
  • 4. 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
  • 5. Focus on Personal Finance
    Factors in Financial Planning Decision Making
    Life situation
    Economy
    Financial Planning Activities
  • 6. 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
  • 7. 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
  • 8. 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
  • 9. 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
  • 10. 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
  • 11. Focus on Personal Finance
    Lesson 2:
    Developing and Achieving Financial Goals
  • 12. 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
  • 13. 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
  • 14. Focus on Personal Finance
    Lesson 3:
    Opportunity Costs and the Time Value of Money
  • 15. 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.
  • 16. Focus on Personal Finance
    Time Value of Money
    TVM- The increases in an amount of money as a result of interest earned.
  • 17. 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.
  • 18. 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.
  • 19. 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.
  • 20. Focus on Personal Finance
    Lesson 4:
    A Plan for Personal Financial Planning
  • 21. Focus on Personal Finance
    A Plan for Personal Financial Planning
    • Determine your current financial situation.
    • 22. Develop your financial goals.
    • 23. Identify alternative courses of action.
    • 24. Evaluate your alternatives.
    • 25. Create and implement your financial action plan.
    • 26. Review and revise your plan
  • Focus on Personal Finance
    Lesson 5:
    Career Choice and Financial Planning
  • 27. Focus on Personal Finance
    Career Planning Process
    Personal assessment
    Employment market analysis
    Application process
    Interview process
    Employment acceptance
    Career Development and Advancement
  • 28. 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
  • 29. Focus on Personal Finance
    Obtain Employment Experience
    Part-time employment
    Volunteer work
    Internships
    Campus projects
  • 30. Focus on Personal Finance
    Identifying Job Opportunities
    Job advertisements
    Career fairs
    Employment agencies
    Business contacts
    Job creation
    Other job search sources
  • 31. 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
  • 32. 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.