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Mr. Elsesser
Introduction to Financial Management
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

Objective:
• Define the p...
Decision Making and Financial Planning

The Decision- Making
Process
Identify Your
Goal

The Financial
Planning Process
Se...
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

Financial Planning also m...
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

You Know What You Want
In...
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

Opportunity Cost
“Consequ...
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

Identifying More Examples...
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

Consequences

**Outcomes ...
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

Alternatives

**Choices…....
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

Risk

**The possibility t...
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

Risk

1) Inflation Risk
2...
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

Inflation Risk

Inflation...
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

Interest Rate Risk

Inter...
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

Income Risk

Income Risk ...
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

Personal Risk

Personal R...
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

Liquidity Risk

Liquidity...
Other Influences
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins
NEFE High School Financial Planning Program
Unit One - Your Financial Plan: Where It All Begins

In Order to Make a Good C...
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Unit 1B - SMART Goals & Decision Making

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Unit 1B - SMART Goals & Decision Making

  1. 1. Mr. Elsesser Introduction to Financial Management
  2. 2. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Objective: • Define the purpose of Decision Making and creating a Financial Plan • Analyze trade offs of an economic decision • Identify economic risk factors to consider in the decision making process Do Now: How does the process of Decision Making relate to your SMART Goals project?
  3. 3. Decision Making and Financial Planning The Decision- Making Process Identify Your Goal The Financial Planning Process Set Goals Establish Criteria Weigh Pros and Cons Make a Decision Evaluate Results 1-L Analyze Information Create a Plan Implement the Plan Monitor & Modify the Plan
  4. 4. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Financial Planning also means.... Decision Making… Opportunity Cost Alternatives Risk Consequences
  5. 5. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins You Know What You Want In order to make a good decision you must be informed of what you need to do to achieve it! What is opportunity cost? A possibility that you give up when you make one choice instead of another. Example: You can buy 1-M save plan coffee every day or money and get a data
  6. 6. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Opportunity Cost “Consequences of Choices” **A Trade off…... **Refers to what you give up when a decision is made or the cost of giving up one thing in order to get something that you want more; **The cost may involve your time, money, and/or effect
  7. 7. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Identifying More Examples: Personal: For example time spent on studying usually means lost time for hanging out with your friends. Financial: For example, the purchase of an item with money from your savings means your will no longer earn interest on that money
  8. 8. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Consequences **Outcomes or results of a decision; **What will happen depending upon what you choose to do. **These are determined by your actions or lack of actions
  9. 9. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Alternatives **Choices…. **Different ways to solve a problem; **Opportunities to choose between several courses of action
  10. 10. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Risk **The possibility that your decision will result in a negative outcome; **Taking a chance; **Risk may involve losing money
  11. 11. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Risk 1) Inflation Risk 2) Interest Rate Risk 3) Income Risk 4) Personal Risk 5) Liquidity Risk
  12. 12. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Inflation Risk Inflation is the rise in the level of prices for goods and services over time Inflation Risk Example: If you wait to buy a car until next year, you accept the possibility that the price may increase.
  13. 13. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Interest Rate Risk Interest is the price that is paid for the use of another’s money Interest Rate Risk Example: Interest rates go up and down, which may affect the cost of borrowing or the profits you earn when you save or invest
  14. 14. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Income Risk Income Risk – you may lose your job due to unexpected health problems, family problems, an accident, or changes in your field of work How Can you prepare? Prepare and save – build up 3-4 months of savings to cover cost of living
  15. 15. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Personal Risk Personal Risk: Risk you assume yourself based upon your actions or choices. Personal Risk Example – Driving for eight hours on icy mountain roads may not be worth the money you would save on airfare.
  16. 16. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins Liquidity Risk Liquidity is the ability to easily convert your financial resources to cash without a loss in value Liquidity Risk Example: Some long-term investments, such as a house or an antique doll collection, can be difficult to convert to cash quickly.
  17. 17. Other Influences NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins
  18. 18. NEFE High School Financial Planning Program Unit One - Your Financial Plan: Where It All Begins In Order to Make a Good Choice… Find Advice; Find Information Making a good choice equals using… People Internet Magazines Books Social Media Agencies Other Publications

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