1) Personal financial planning involves arranging one's finances to achieve goals through spending, saving, and investing. It has benefits like increased control over finances and freedom from financial worries. 2) There are six steps to financial planning: 1) determine your current financial situation, 2) develop financial goals, 3) identify alternative courses of action, 4) evaluate alternatives, 5) create a financial plan of action, and 6) review and revise the plan. 3) Creating a strong financial plan involves understanding your needs and goals, and developing customized strategies for income tax, estate planning, retirement, investments, education, business, and risk management to navigate financial challenges and changes over time.

1. S H A H N AWA Z A L I
PERSONAL FINANCIAL
PLANNING

2. PERSONAL FINANCIAL PLANNING
Why is it important to have a plan before
making a financial decision?

3. WHAT IS PERSONAL FINANCE?
• Personal Financial Planning – Arranging to spend, save and
invest money to live comfortable, have financial security and
achieve goals.
• Goals – Things that you want to accomplish
• Examples:
• Getting a college education
• Buying a car
• Starting a Business
Planning for your personal finances is important because it will
help you to reach your goals, no matter what they are.

4. BENEFITS OF FINANCIAL PLANNING
• Increase effectiveness in obtaining, using and protecting your
financial resources throughout your life
• Increased control of your finances by avoiding too much debt,
bankruptcy and dependence on others
• Improved personal relationship gained from well-planned and
well-communicated financial decisions
• A sense of freedom from financial worries gained from
looking to the future, anticipating expenses and achieving
personal economic goals.

5. • Savings
• Monthly Income (job earnings,
allowance, gifts and interest on
bank accounts
• Monthly Expenses (Money you
spend)
• Debts (Money you owe to others
When you have determined your
financial situation, you will be able
to start planning.
STEP 1
DETERMINE
YOUR CURRENT
FINANCIAL
SITUATION
SIX STEPS TO
FINANCIAL
PLANNING
What is your current financial situation?
Make a list of items that relate to your finances:

6. • Is it more important to spend
your money now or to save
for the future?
• Would you rather get a job
right after high school or
continue your education?
• Will your chosen career
require additional training or
education in the future?
• Do your personal values
affect your financial
decisions?
STEP 2
DEVELOP YOUR
FINANCIAL
GOALS
SIX STEPS TO
FINANCIAL
PLANNING
ASK YOURSELF 
Values – Beliefs and principles you consider important,
correct and desirable.
People value different things.

7. NEEDS VS. WANTS
NEEDS
Something you must
have to survive
 Food
 Shelter
 Clothing
WANTS
Something you desire or
would like to have or do
 _________________
 _________________
 _________________
Only you can decide what specific goals to pursue.

8. Suppose that you are saving $500
a month. You have options:
 Continue the same course of
action. (Do not change)
 Expand the current situation.
(Increase savings to $600)
 Change the current situation.
(Invest in stocks instead of
money going into savings
account)
 Take a new course of action.
(Use $500 to pay off debts)
STEP 3
IDENTIFY
ALTERNATIVE
COURSE OF
ACTION
SIX STEPS TO
FINANCIAL
PLANNING
It is impossible to make a good decision unless you
know your options

9. Financial Specialists
 Accountants
 Bankers
 Financial Planners
 Insurance Agents
 Tax Attorneys
 Tax Preparers
Technology
 Computer Software
 Internet
STEP 4
EVALUATE
YOUR
ALTERNATIVE
SIX STEPS TO
FINANCIAL
PLANNING
Use the many sources of financial
information that are available:

10. The Media
 Books
 Magazines
 Newspapers
 Radio
 Television
Financial Institutions
 Banks
 Credit Unions
 Insurance and Investment
Companies
Education
 High School Classes
 College Courses
 Seminars
STEP 4
EVALUATE
YOUR
ALTERNATIVE
SIX STEPS TO
FINANCIAL
PLANNING

11. Opportunity Costs:
It is what is given up when
making a choice instead of
another option.
Choosing involves more
than knowing what you
might give up.
It also involves knowing
what you would gain.
STEP 4
EVALUATE
ALTERNATIVE
COURSES OF
ACTION
SIX STEPS TO
FINANCIAL
PLANNING
Consider the consequences and risks
of each decision you make.

12. & EVALUATING RISKS
OPPORTUNITY COSTS
Example – The opportunity cost of going to college could be
the benefit of gaining a high paying full time job but losing out
on a good job you had in high school. You will also have to pay
for college.
Evaluating Risks – When you make a financial decision, you
also accept financial risks.

13. TYPES OF FINANCIAL RISKS
Inflation
Risk
Interest
Rate Risk
Income
Risk
Personal
Risk
Liquidity
Risk

14. ECONOMIC CONDITIONS &
FINANCIAL PLANNING
• How can the ECONOMY affect your personal financial
planning or money management?
• The House of Representatives just passed a bill to cut 5
billion dollars a year in food assistance to low income
families. How does this affect the financial planning of the
people that currently receive food assistance?
Economy – The ways in which nations make decisions to
allocate their resources… production and consumption of
goods and services.

15.  Inflation Risk – If you wait to buy a car
until next year, you accept the possibility
that the price many increase.
 Interest Rate Risk – Interest rates go up or
down, you may affect the cost of
borrowing or the profits you earn when
you save or invest.
 Income Risk – You may lose your job due
to unexpected health problems, family
problems, an accident or changes in your
field of work.
 Liquidity Risk – Liquidity is the ability to
easily convert financial assets into cash
without loss in value. Some long-term
investments, such as a house, can be
difficult to convert quickly.
STEP 4
EVALUATE
ALTERNATIVE
COURSES OF
ACTION
SIX STEPS TO
FINANCIAL
PLANNING

16. INFLATION RISK
UNDERSTANDING INFLATION
Minimum Wage

17. Economic
Condition
What it Measures How it Influences Financial Planning
Consumer
Prices
The value of a
dollar and it
changes with
inflation
• If consumer prices increase faster than
wages, the value of the dollar decreases
(A dollar buys less than it did before.)
 Consumers tend to buy fewer goods
and services.
Consumer
Spending
Demand for
goods and
services by
individual and
households
 Increased consumer spending usually
creates more jobs and higher wages.
 Reduced consumer spending causes
unemployment to increase.
Interest Rates
Cost of money,
cost of credit
when you
borrow and the
return on your
money when
you save or
invest
 Higher interest rates make borrowing
money more expensive and make
saving more attractive.
 When interest rates increase, consumer
prices tend to increase.

18. Economic
Condition
What it Measures How it Influences Financial Planning
Money Supply
The dollars available
for spending in our
economy
The Federal Reserve Systems (The
FED) sometimes adjusts interest
rates in order to increase or
decrease the amount of money
circulating in the economy.
 If the FED lowers interest rates,
the money supply increases.
 If the FED raises interest rates,
the money supply decreases.
Unemployment
The number of people
without jobs who are
willing and able to
work
 Low unemployment increases
consumer spending.
 High unemployment reduces
consumer spending.

19. A plan of action is a list of ways to
achieve your financial goals.
If you want to increase your savings
 Cut back on spending
 Increase your income
o Get a part time job
o Work more hours at your present
job
o Take part of your current income
and invest it
Create a budget
STEP 5
CREATE YOUR
FINANCIAL
PLAN OF
ACTION
SIX STEPS TO
FINANCIAL
PLANNING

20. Creating a Strong
Financial Plan

21. PLANNING FOR THE
ROAD AHEAD ///
• Focus on your specific needs and goals
• Use those to shape decisions on your investment, retirement,
education, taxes, insurance and estate planning
• The path to financial security can be challenging

22. WHAT TO EXPECT IN
A FINANCIAL PLAN ///
• A customized, unbiased proposal based on your unique needs,
resources and goals
• Practical strategies to navigate the complexities of your
financial life, building on strengths and addressing weaknesses
• Flexibility to handle the good, bad and unexpected in personal
and professional lives
• Help monitoring and revising to meet your goals as well as
your lifestyle

23. A clear understanding of where you are and where you
want to be
WHAT ARE YOUR NEEDS? ///
Income tax planning
and preparation
Estate planning
Retirement planning
Investment planning
Education planning
Strategic business
planning and consulting
Risk management planning

24. INCOME TAX PLANNING
AND PREPARATION
• Impact of tax-law changes
• Short- and long-term planning
• Reducing future liability
• Dealing with the IRS

25. ESTATE PLANNING
• Review wills, trusts and retirement
plans
• Keep all documents up to date
• Preserve assets for the next
generation and reduce tax liability
• Honor your wishes

26. RETIREMENT PLANNING
• What does your retirement
dream look like?
• How much is needed to
get there?
• Primary sources of retirement
income and distribution models
• Tax-efficient financial choices
can be considered

27. INVESTMENT PLANNING
• Risk tolerance
• Asset allocation and cash flow
• Investment options
• Tax implications
• Strategies for financial
setbacks or windfalls

28. EDUCATION PLANNING
• Strategies for consideration
• Tax credits and deductions
• Involving your children
• Updating your plan to reflect
life-event changes

29. BUSINESS PLANNING
• A realistic business plan
• Organizational structure
• Financing
• Employee benefits, executive
compensation, retirement
plans, insurance and other
considerations
• Integration with personal
financial goals and plan

30. RISK MANAGEMENT
PLANNING
• Protection of assets
• Understanding liability in
business ventures
• Affect of loss on income or
assets
• World events, both natural and
man-made

31. • As you get older, your
finances and needs will
change.
• Your financial plan will
have to change too.
• Re-evaluate and revise
your financial plan every
year.
STEP 6
REVIEW AND
REVISE YOUR
PLAN
SIX STEPS TO
FINANCIAL
PLANNING

32. TYPES OF FINANCIAL GOALS
1. Time Frame to Achieve Goal
2. Type of Financial Need that Inspires your Goals
Time Frame to Achieve Goal
 Short Term Goal = Less than one year
 Intermediate Goal = One to five years
 Long-Term Goals = More than five years
Intangible items (something you cannot hold or touch) are often
overlooked but can be very expensive.
They often are items you consider when weighing the
opportunity cost of something.

33. PERSONAL AND FINANCIAL
OPPORTUNITY COSTS AND STRATEGIES
Whenever you make a choice, you have to give up, or
trade off, some of your other options. When making
your financial decisions and plans, you must weigh, or
consider both the personal and financial opportunity
costs carefully.
Can you think of examples?

34. OPPORTUNITY COST
What is an opportunity cost? (in your own words)
Personal Opportunity Costs – Making choices about how you
spend your personal resources
• Health
• Knowledge
• Skills
• Time

35. OPPORTUNITY COSTS
Do you eat a lot of junk food and avoid exercise?
Do you get enough sleep for an exam the next morning?
Do you study for a test or go a concert you were invited
to?
HAVE YOU HAD ANY
PERSONAL OPPORTUNITY COSTS LATELY?
You cannot do both because people have a limited
amount of time.

36. FINANCIAL OPPORTUNITY COSTS
Making choices about how you spend your money.
Do you buy new Nike Jordans at the mall for $119.00 plus tax
or do you save your money?
Spending money instead of putting it in your savings account
can mean lost interest earnings.
You cannot do both because most people have a limited
amount of money.
College Spending = BUDGET

37. FINANCIAL STRATEGIES
Financial planning involves choosing a
career and then learning how to
protect and manage the money you earn.

38. 8 STRATEGIES TO AVOID
COMMON MONEY MISTAKES
1. OBTAIN – Obtain financial resources by working, making
investments and/or owning property.
2. PLAN – The key to achieving your financial goals and financial
security is to plan how you will spend your money.
3. SPEND WISELY – Many people spend more than they can
afford. Other people buy things they can afford but do not
need. Spending less than you earn is the only way to achieve
financial security.
4. SAVE – Long-term financial security starts with a savings plan.
If you save on a regular basis, you will have money to pay your
bills, make major purchases and cope with emergencies.

39. 8 STRATEGIES TO AVOID
COMMON MONEY MISTAKES
5. BORROW WISELY – When you use a credit card or take out
another type of a loan, you are borrowing money. Borrowing
wisely, and only when necessary, will help you achieve your
financial goals and avoid money problems.
6. INVEST – Investing increases current income and helps to achieve
long-term growth.
7. MANAGE RISK – To protect your resources in care you are ever
seriously injured, get sick or die, you will need insurance coverage
to protect you and those who depend on you.
8. PLAN FOR RETIREMENT – When you start to plan for retirement,
consider the age at which you would like to stop working full time.
You should also think about where you will want to live and how
you will spend your time (part time job, doing volunteer work or
enjoying hobbies or sports).

40. M R S . G R AY
PERSONAL FINANCIAL
PLANNING

41. DEVELOPING AND USING A
FINANCIAL PLAN
A good personal financial plan includes assessing your
present financial situation, making a list of your current
needs and planning for future needs.
Making your financial plan work
takes time, effort and patience
but you will develop habits that
will give you a lifetime of
satisfaction and security.

42. MONEY MANAGEMENT
CURRENT EVENT
• Find a current event using GOOGLE NEWS
• Search using topics we have discussed in class
• “Personal Finance” “Money Management” “Economy 2014”
“ Consumer Spending” “Unemployment” “Interest Rates”
ADD TEENAGER – YOUNG ADULT
YOUR CHOICE!!!
Google NEWS

43. PERSONAL FINANCIALLY
PLANNING EQ
• Why is it important to plan before making a financial
decision?
• Laptop, Cell Phone, Car, House, Education, Career
• As a high schooler, what difference does it make how I
spend my money now?
• Savings, habits, Investments, emergencies, risks vs benefits
• What are your financial goals? Which goals are needs
and which are wants?
• People have a variety of choices when making
purchases. What are the benefits of shopping at thrift
shops, discount stores and stores that sell used
merchandise?

44. PERSONAL FINANCIAL
PLANNING EQ
• Do you think purchasing money management software is
worth the investment? What is money management
software?
• Which resources might you contact if you want
information about saving for college or assistance paying
for college?
• What strategies can you use to reach your financial
goals?
• What are some you many have in ten years from now
that you do not have today?

45. PERSONAL FINANCIAL
PLANNING EQ
• How can opportunity costs be evaluated differently by
different people?
• How can a need for one person may be a want for
another?
• What factors might play a part in the revision of your
financial plan as you get older?
• Interpret the phrase “spend money to make money” and
explain how it relates to personal finance.

46. MONEY MANAGEMENT
DO NOW
 Make a list of five items you would like to buy
 Estimate the cost of each item
 What is the benefit of each item?
How much time do you think it will take to save the
money for each item?
How can this activity be considered financial
planning?