OPENING
We all want something that costs more than the money we have.
Think of something you want.
• What would you do to get it?
• Ask parents?
• Borrow from a friend?
• Do you really need it or just want it?
GOALS
&
FINANCIAL PLANNING
1.3
OBJECTIVES
By the end of this lesson, you will be able to:
• Define: Opportunity Cost, Trade-Offs, Delayed
Gratification, and Satellite Decisions
• Compare and contrast short-term, intermediate and long-term goals
• Analyze the five steps in the financial planning process
• Create SMART goals
GOALS
• What are goals?
• Why do people set goals?
• What are some of your goals?
Take two minutes to make a list of all of your goals. They can be
academic, personal, financial, occupational, anything.
TIMING OF GOALS
Short-Term
Intermediate
Long-Term
3 months or sooner
between
3 months & a year
more than a year
Now, go through your list of goals, and write a “S,” “I,” or “L”
next to each of your goals to categorize them. You should
have at least 5 goals for each category.
SINCE REACHING YOUR
GOALS TAKES TIME…
OPPORTUNITY COST
• “what you give up to get something else”
• “the value of the next-best alternative”
• Hard to measure: so usually described:
– “High opportunity cost”
– “Low opportunity cost”
OPPORTUNITY COST EXAMPLES
WHAT WOULD THE OPPORTUNITY COST BE
FOR THIS WOMAN TO OPEN UP A NEWSPAPER
STAND IN NY?
HIGH
OR
LOW
WHAT WOULD THE OPPORTUNITY COST BE FOR THIS
BASKETBALL MAN TO PLAY AFTER HIGHSCHOOL
INSTEAD OF ATTENDING COLLEGE ?
HIGH
OR
LOW
What is the opportunity cost of achieving
each of your goals? Why?
TRADE-OFFS
• “giving up one want to satisfy another”
• How do trade-offs relate to opportunity cost?
• Why do we have to make trade-offs?
SATELLITE DECISIONS
• “when a major decision leads to several smaller ones”
• What are some examples of satellite decisions?
• ex. Car
– (what kind, down payment, color, where and when to buy, insurance, etc.)
DELAYED GRATIFICATION
• Take a guess… what do you think it means?
• What are some examples of delaying gratification?
– saving money over time to make a major purchase
– waiting to buy a new product until the price goes down
– waiting to see the latest movie until the crowds get smaller and the lines
shorter
MAKING FINANCIAL GOALS
Be “SMART”
USING WHAT WE’VE LEARNED….
• Let’s make some financial goals!
• What are some things that you need money for in your future?
• Be sure to consider short-term, intermediate, and long-term goals!
SMART Goals
• Specific
• Measurable
• Attainable
• Realistic
• Time-limited
SMART Goals Examples
• Specific
• Measurable
• Attainable
• Realistic
• Time-limited
• “Pay for lodging, transportation,
meals for
a 5-day
trip
to Washington,
How
can
we
make
all of
D.C.”
the financial
goals
• “$300
through fundraising,
$50we
from
birthday
save $25
a week.”
listed money,
earlier,
SMART?
• “If I stick to my plan, I’ll have the
money when I need it.”
Go ahead and edit your
while I work toward this goal.”
goals to make them
• “I need to have all the money by 6
SMART.
months from
now.”
• “I still have enough money to live on
The Decision- Making
Process
Identify Your
Goal
Set Goals
Establish
Criteria
Examine Your
Options
The Financial
Planning Process
Weigh Pros
and Cons
Analyze
Information
Create a Plan
Implement
the Plan
Make a Decision
Evaluate
Results
Monitor & Modify
the Plan
LET’S PUT SOME NUMBERS TO THIS…
• You all did a spending log for HW….take it out.
• See your final total for the week. If it’s positive, good job. If it’s
negative, you need to decide what you’re going to cut to make it
positive. Go ahead and do this now.
• Next, you are going to calculate how many weeks it will take for
you to reach each of your goals at the same rate. List 3 of each
short, intermediate, and long-term goals in a new Google Doc,
with how many weeks it will take you to reach each.
QUIZ REMINDER!
Know these
terms:
• financial goals
• opportunity cost
• financial planning
• satellite decisions
• goals
• scarcity
• barter
• incentive
• short-term goal
• cash flow
• inflation
• store of value
• currency
• intermediate goal
• supply
• decision
• liquidity
• trade-off
• delayed gratification
• long-term goal
• unit of measure
• demand
• medium of exchange
• values
• economist
• money
• wants
• economy
• needs