Unit 1: The Financial Planning
Process
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Learning Objectives
I can explain why personal financial planning is so important.
I can describe the five basic steps of personal financial planning.
I can set short, intermediate, and long term goals.
I can explain how career management and education can determine
income level.
I can calculate monthly income using hourly, overtime, and
commission based rates.
I can create a resume.
I can create a cover letter.
I can explain appropriate interview attire for a male and female.
I can list what to do before, during, and after an interview.
Financial planning allows you to
accomplish the following:
• Manage the unplanned
– Plan to deal with the unexpected
– Allows you to bounce back from a hard knock instead
of going down for the count
• Accumulate wealth for special expenses
– Maps out strategies for travel, a big wedding, college
for you or your children, or buying a home
• Save for retirement
– You do not want to be penniless at 65
– Planning will help you live a life of retirement ease.
Financial planning allows you to
accomplish the following (cont.):
• “Cover your assets”
– Protect what you’ve got
• Invest intelligently
– Providing basic principles of investment for smart
investing
• Minimize your payments to Uncle Sam:
– Helps you legally reduce the amount of tax you
have to pay
The five basic steps to personal
financial planning…
• Step 1: Evaluate Your Financial Health
• Step 2: Define Your Financial Goals
• Step 3: Develop A Plan of Action
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Flexibility
Liquidity
Protection
Minimization of Taxes
• Step 4: Implement Your Plan
• Step 5: Review Your Progress, Reevaluate, and
Revise Your Plan
Establishing Goals
• Short-term- can be accomplished in a one year
period
– Example: new shoes, television, taking a vacation
• Intermediate term- may take from 1 year to 10
years to accomplish
– Saving for college, a new car, a home, a wedding
• Long term- takes more than 10 years to
accumulate money
– A second home, retirement
Financial Life Cycle
• Stage 1: Early Years- time for wealth
accumulation (through age 54)
• Stage 2: Approaching Retirement- the Golden
Years (ages 55-64)
• Stage 3: The Retirement Years (age 65 and
older)
• Estate planning- planning for your eventual
death and the passage of your wealth to your
heirs
• Inflation- an economic condition in which
rising prices reduce the purchasing power of
money
What are your financial goals?
Bellringer
• Write the question and answer on a scratch
piece of paper. We will turn these in later.
• How do YOU feel career choices impact your
financial health? Explain using 2 or more
sentences.
Research Shows…
Average Yearly Income
120000
100000
99300
$
80000
60000
40000
45400
20000
18900
25900
0
High School
Dropout
High School
Diploma
College
Graduates
Professional
Degrees
Research Shows…
What A Difference A Degree Makes
4
3.5
3.4
In millions
3
2.5
2.5
2
2.1
1.5
1
1.2
0.5
0
High School
Diploma
Bachelors Degree Masters Degree
Doctoral Degrees
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Unit 1: The Financial Planning Process