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