OPENINGWe 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 PLANNING1.3

OBJECTIVESBy 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

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.

Short-Term Long-TermIntermediate

3 months or soonerbetween

3 months & a year more than a year

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

Be “SMART”

MAKING FINANCIAL GOALS

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, D.C.”

• “$300 through fundraising, $50 from birthday money, save $25 a week.”

• “If I stick to my plan, I’ll have the money when I need it.”

• “I still have enough money to live on while I work toward this goal.”

• “I need to have all the money by 6 months from now.”

How can we make all of the financial goals we listed earlier, SMART?

Go ahead and edit your goals to make them

SMART.

The Decision- Making Process

EvaluateResults

Make a Decision

Identify YourGoal

Weigh Pros and Cons

EstablishCriteria

Monitor & Modifythe Plan

Implement the Plan

Set Goals

Create a Plan

AnalyzeInformation

The Financial Planning Process

Examine Your Options

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:• barter

• cash flow

• currency

• decision

• delayed gratification

• demand

• economist

• economy

• financial goals

• financial planning

• goals

• incentive

• inflation

• intermediate goal

• liquidity

• long-term goal

• medium of exchange

• money

• needs

• opportunity cost

• satellite decisions

• scarcity

• short-term goal

• store of value

• supply

• trade-off

• unit of measure

• values

• wants