Daily Information
Objectives:
• Prepare a personal cash flow statement and a net worth statement.
• Apply a decision-making process to personal financial choices.
Warm Up:
On a piece of paper, describe the difference between…
instant gratification vs.
future gratification
Agenda:
1.Complete warm-up2.Define vocabulary3.Cash Flow and Net Worth P.P.4.Student activity5.Bottom Line
Resources Limit Choices
Unlimited Wants/Needs + Limited Financial Resources = Financial Choices
Remember….
• Businesses create demand
by advertising
• Don’t be tempted to buy products you can not afford
• Evaluate your financial situation through cash flow statements and net worth statements.
Cash Flow StatementApril 1-30, 2012
Cash Inflows (Income)
Work (part-time) $120.00
Allowance for household chores 40.00
Lunch money allowance 60.00
Savings account interest 2.00
Total cash inflows $222.00
Cash Outflows (Expenses)
Gifts $20.00
Clothes and shoes 60.00
Loan payment to parents 20.00
Lunches 60.00
Entertainment/miscellaneous 40.00
Total cash outflows 200.00
Net cash flow $22.00
Slide 54-1 Resources and Choices
PERSONAL NET WORTH STATEMENT
Assets (items of value) Liabilities (debt)
Cash and checking account $ 452.56 Car loan $1,100.00
Savings account 500.00 Credit card debt 200.98
Savings bond 300.00 Total liabilities $1,300.98
Baseball card collection
100.00
Computer, iPod, games
300.00
Car, current value 3,000.00 Net Worth
Total assets $4,652.56 Assets minus liabilities
3,351.58
Total liabilities and net worth $4,652.56
Net Worth
Decision-Making Process
1.Define the need.
2.List options for meeting the need.
3.Compare the options.o Consider the opportunity cost—the value of your
next best option.
4.Make a decision.
5.Take action based on your decision.
6.Reevaluate your choice.
Financial Strategies
• Consider your future
• If you have doubt, don’t buy it
• Avoid buyer’s remorse (impulse buys)
Individual Activity
• Based on the information provided in the handout, create a cash flow statement and a net worth statement for Andrea McCall
Daily Information
Objectives:
• Identify the purpose of and prepare a budget.
• Describe recordkeeping methods used in the budgeting process.
Warm Up:
What is philanthropy?
Agenda:
1.Complete warm-up2.Philanthropy video3.Define vocabulary4.Budgeting P.P.5.Student budgeting activity6.Bottom Line
What does it mean to Budget?
• Manage your money
• Plan how to spend or save it
• Present vs. future
• Based on estimated income
and expenses
• Use spreadsheets to prepare
How Do You Prepare a Budget?
• Step 1: Analyze your spending for one month (where does your money go?)
• Step 2: Create a spreadsheet based on spending habits
• Step 3: Designate money to specific categories (how much is needed?):o Variable expenseso Fixed expenseso Charitable giving
• Step 4: Balance the budget (adjust if necessary)
Be Sure to Pay Yourself First!
• Before designating money in different categories, take a fixed amount for yourself and put it in your savings account.
Remember, a little goes a long way!
Amount Saved Interest Earned 10 Year Future Value
$7.00 5% $4,720
$21.00 5% $14,160
$35.00 5% $23,600
70-20-10 Strategy
• Spend 70% of your income
• Save 20% of your income
• Invest 10% of your income
Budget Analysis
Make sure every dollar has a name on paper before you receive it!
• Not everything will go as planned– Especially the first couple of months
• Variances will occur – Difference between planned and actual
Record Keeping
• Manual– Pen and paper– Keep it somewhere safe
• Electronic– Using software such as Quicken– Microsoft Excel (encrypt) – Google Docs
Personal BudgetIncome Weekly Monthly Yearly
Work (part-time) $30.00 $120.00 $1,440.00Allowance for household chores
10.00 40.00 480.00
Lunch money allowance 15.00 60.00 720.00Savings account interest .50 2.00 24.00Total income $55.50 $222.00 $2,664.00
Savings
Deposit to savings account $ 5.50 $ 22.00 $ 264.00
Expenses
Gifts $ 5.00 $ 20.00 $ 240.00Clothes and shoes 15.00 60.00 720.00Loan payment to parents 5.00 20.00 240.00Lunches 15.00 60.00 720.00Entertainment/miscellaneous 10.00 40.00 480.00Total expenses $50.00 $200.00 $2,400.00
Total savings and expenses $55.50 $222.00 $2,664.00
Budgeting Activity
• Read through the directions on the handout and complete.
Daily Information
Objectives:
• Explain the purpose an steps in financial planning.
• Describe ways you can protect your financial resources.
Warm Up:
Read the handout about SMART goals.
Agenda:
1.Complete warm-up2.Socratic seminar on article 3.Financial Planning P.P.4.Marshmallow activity 5.Bottom Line
Socratic Seminar Activity
I will read a goal out loud. Determine if it is a short-term or long-term goal and move to the appropriate side of the room.
Short-Term Long-Term
Financial Planning
The process of looking at your current financial situation and thinking about your future.
• Includes personal and financial goals along with steps and a timeline for completing them.
• Make sure to review and update your financial plan periodically.
Steps for Financial Planning
• Step 1: Gather financial information– Look at all financial records
• Step 2: Analyze information– Make sure nothing is missing– Is your income covering your expenses?
• Step 3: Set Goals– Personal and financial– Short and long term
Steps for Financial Planning
• Step 4: Develop a timeline– Goals should be measurable
• Step 5: Implement the plan– Work towards achieving your goals– Check progress vs. timeline
Financial Plan (One Goal)
FINANCIAL PLAN
Net worth on April 1, 20--: $525.56
Personal Goal Financial Goal Steps to Take (Benchmarks) Timeline
Live in my own house in the country.
Buy a house in the country.
1. Save money for a down payment ($12,000)
5 years
• Set aside $200 per month Once per month
• Open a separate account for money saved
November 6 (next week)
• Talk to a mortgage broker to get prepared
Make an appointment for November 9
2. Get a job that provides enough income to make monthly payments
2 years
Where Can You Get Good Financial Advice?• Financial planners
• Financial experts
• Newspapers and magazines
• Seminars and workshops
• Financial websites
How Can You Protect Financial Resources?• Deal only with financial advisers you
know and trust
• Keep good records
• Verify account balances regularly
• Guard passwords
• Be aware of phishing
• Guard against identity theft
Marshmallow Activity
• Supplies: A pinch of toothpicks and a handful of small marshmallows
• Task: Create a free standing tower using your supplies
• But…Before you build, work as a team to write down a GOAL to serve as your road map. Be prepared to share this with the class.
• Ready-Set-Build!
Create a personal goal
Remember to be…Specific
MeasurableAttainableRealistic
Time Bound
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