Anything that involves money and you.› Your allowance› The money that you make at your job› The money that you save› The money that you spend

What is it?› Is arranging to spend save and invest

money to live comfortably, have financial security and achieve goals.

Financial Goals› Are the things you want to accomplish.› Going to college › Buying a car› Saving for your family

We will use these to direct ourselves through the rest of the discussion.

1. Determine You current Financial Situation

2. Develop Your financial goals3. Indentify Your Options4. Evaluate your alternatives5. Create and use your financial plan of

action6. Review and revise your plan

Make a list› How much do you have in your savings,

checking, under your bed?› How much money do you make a month

Job, gifts, allowance, interest income

› How much do you spend a month on things Lunch, Clothes, Entertainment

› Debts Who do you owe money to?

Teaching Salary - $90,000 per year Coaching Salary - $5000 per year Savings Account - $1000 Checking Accounts $3000 Interest per month - $100

Monthly Mortgage Payments $2000 per month

Car Payment $800 per month Credit Card Payment $1000 per month

Rank Name Net Worth ($bil) Age Residence Source1 William Gates III 57.0 52 Medina, WA Microsoft 2 Warren Buffett 50.0 78 Omaha, NE Berkshire

Hathaway 3 Lawrence Ellison 27.0 64 Redwood City, CA Oracle 4 Jim Walton 23.4 60 Bentonville, AR Wal-Mart 5 S Robson Walton 23.3 64 Bentonville, AR Wal-Mart 6 Alice Walton 23.2 59 Fort Worth, TX Wal-Mart 6 Christy Walton &

family23.2 53 Jackson, WY Wal-Mart

inheritance 8 Michael Bloomberg 20.0 66 New York, NY Bloomberg 9 Charles Koch 19.0 72 Wichita, KS manufacturing,

energy 9 David Koch 19.0 68 New York, NY manufacturing,

energy 11 Michael Dell 17.3 43 Austin, TX Dell 12 Paul Allen 16.0 55 Seattle, WA Microsoft,

investments 13 Sergey Brin 15.9 35 Palo Alto, CA Google 14 Larry Page 15.8 35 San Francisco, CA Google 15 Sheldon Adelson 15.0 75 Las Vegas, NV casinos, hotels 15 Steven Ballmer 15.0 52 Hunts Point, WA Microsoft 15 Abigail Johnson 15.0 46 Boston, MA Fidelity 18 Jack Taylor &

family14.0 86 St Louis, MO Enterprise Rent-A-

Car 19 Anne Cox

Chambers13.0 88 Atlanta, GA Cox Enterprises

20 Donald Bren 12.0 76 Newport Beach, CA real estate

Think about your attitude toward money……› Are you more likely to spend money right

now or save it?› Would you rather go straight to work after

high school or are you wanting to go to college?

Your VALUES effect your financial decisions. (What do I mean by that?)

Are the beliefs and principles you consider important, correct and desirable. Different people value different things.› Had friends go right to work after high

school, while others went to college. Both are successful and have families. They just believed that in order for them to be successful they had to travel their own path.

Needs vs. Wants› Need – something you must have to survive.

Food, Water, Clothing (Does not that new Versace purse either)

› Want – Something that you would like to have but do not need.

You may need a new winter coat, but you may want the leather jacket……

Look back at your financial goals and determine which are needs and wants.

Lets list them on the board……

Pretend that I gave you an extra $50.00 per week. What are your options?

1. EXPAND YOUR CURRENT SITUATION -You could take that extra $50 and put it into savings and even save more a month.

2. CHANGE YOUR CURRENT SITUATION - You could invest the money in the stock market to try to make more money.

3. START SOMETHING NEW - could pay off some debt the you may have acquired.

4. CONTINUE THE SAME COURSE OF ACTION – Chose not to do anything with the money.

You need to look at your situation in life, your present financial situation, and your personal values. For each situation that deals with money you need to consider the consequences and risks that come with each decision.

What can help you make these decisions› Average Salary› Financial Specialists

Accountants, bankers, financial planners› Use the internet

Computer software can help you determine if you are getting in to deep into debt. Mortgage calculators Income calculators

http://www.disposableincome.net/› Books and magazines› Financial Institutions› Your education

What are the consequences of your choices…..› Opportunity cost – a trade off, is what is

given up when making one choice instead of another. Going to college instead of going right to

work and making money.

What are the risks of making that decision. Though the risk may not be extremely dramatic there are

different types of risk to think about.› Inflation risk – the cost of an item may increase next

year.› Interest Rate Risk – may effect the cost of you

borrowing money › Income Risk – you may loose your job, or may not get

that raise you hoped for.› Personal Risk – The job you may do may be

dangerous, or the option of you driving a car to somewhere versus flying.

› Liquidity Risk – How quickly can you convert this good into cash.

What are you going to do to achieve your plan of action.› Spend less› Get a second job› Pay off debts

Goals are set into three categories› Short- Term – can be achieved in one year› Intermediate – 2 to 5 years› Long-term – more than 5 years to achieve.

› Go and categorize your goals on your sheet of paper.

Def – of need – something you need to survive.

Your financial goals are set on the types of things that you buy.› Services – something that someone does

for you. Plumber, hair stylist provide services for you.

› Goods – physical items that are produced and can be weighed or measured.

Consumable goods – purchases that you make often and use up quickly. Food, toothpaste etc. Thought the cost of these goods may not measure up to a cost of a car they do add up..

Durable Goods – are expensive items that you do not purchase often. Cars, appliances (refrigerators, stoves)

Intangible items – cannot be touched but are often important to our well-being and happiness.› Happiness at your job, health, education, and free time,

and be very expensive.

What types of things are going to influence you personal finances in the future?› Life Situations› Personal Situations› Economic Factors

How long will you live? Going to College -

Starting a new career Getting married Having children Moving to a new city…

http://cgi.money.cnn.com/tools/costofliving/costofliving.html

Choosing to move out of the house away from the parents.› Average cost of rent in St. Louis $700 and

$800 Paying the bills that come with the

move

Choosing to move out of the house away from the parents.› Average cost of rent in St. Louis $700 and

$800 Paying the bills that come with the

move Do you want to be a millionaire?

› Millionaire calculator

Economics› Something you hear about everyday in the

news.› The study of the decisions that go into

making, distributing, and using goods and services.

› The Economy Is the actual “market” or ways in which we

make, distribute, and use goods and services.

Supply vs. Demand› Supply – is the amount of goods and

services you purchase› Demand – is the amount of goods and

services people are willing to buy.

1. Consumer Prices2. Consumer Spending3. Interest Rates

Most products increase in price over time.

This increase in price is called INFLATION.

During times of rapid inflation it takes more money to buy the same amount of good or service.

EX. A computer that cost $1000 a year ago may cost $1050 now.

What causes inflation?› People have more money to spend on items

without a increase in supply. Remember the FED has something to do

with this as well. When interest rates are low, people have a tendency to spend more money and inflation goes up…

When interest rates are high, people put money in the bank to save and interest rates go down.

You are a consumer and when you purchase and item. That company that produced the item makes money and hires more employees to make more products. This then increase our employment rate. More people work and spend more money. However the opposite can happen as well.

Money has a price, that price is called interest…..

Interest – is the cost that people pay for to use other people money..

Here is how this all works….› When you take grandmas birthday check and

deposit it into the bank, and the bank gives you an interest rate, they are paying you to let them use your money. The bank inturn takes your money and lends it to people who want to borrow money form the bank.

When the supply of money in the bank grows interest rates go down. People are saving more.

When consumers borrow more money, then interest rates go up.

Interest rates on loans also rise during inflation.

2007 Cost Gallon of Milk $3.12 Gallon of Gas $2.56 Tube of Toothpaste

$5.00 Lawnmower $235 Alarm Clock $25 Loaf of Bread $1.00 Stapler $19.95 Pair of Shoes $85 Car $22,000 $225,000 Home

1980’s CostGallon of Milk $1.23Gallon of Gas 1.01

Tube of Toothpaste $1.98Lawnmower $92.96

Alarm Clock $9.89Loaf of Bread $.40

Stapler $7.89Pair of Shoes $33.62

Car $8.702.87Home $89000.67

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