Developing a Personal Financial System Consumer Education Unit

Developing a Personal Financial System Consumer Education Unit 7

Establish Your Financial Goals ¢ Decide what you want your money to do for you ¢ Determine what style of living you wish to achieve ¢ List savings objectives

Estimate and Total Your Income ¢ Determine how much money you receive from all sources – earnings, gifts, bonuses, interest on savings, and allowances

Estimate and Total Your Expenses ¢ List all your expenses under one of three headings: fixed, flexible, and occasional ¢ Add these expenses to determine how much money you spend during each plan period

Terms ¢ Fixed Expense – set amount of money due on a set date; includes savings, rent, tuition, insurance premiums, organization dues, or installment payments ¢ Flexible Expense – outlay occurs regularly but the amount varies; includes utilities, food, clothing, and entertainment ¢ Occasional Expense – expenditure occurs once in a while and amount varies; includes vacation, taxes, and gifts

Analyze Your Current Income and Spending ¢ Carefully examine the amounts you estimated for both income and expenses. ¢ Subtract your expenses from your income for each plan period. If you come out even or need extra money, consider ways to increase your income of cut your expenses. If you have extra money, decide how you want to apply it toward your savings goal.

Teenagers spend an average of $3, 309. 00 per year, according to a 2003 study by Harris Interactive.

Prepare a Trial Financial Plan ¢A written plan listing your goals, your income, and your expenses reduces the temptation to overspend or spend carelessly. ¢ Put your financial plan into writing. ¢ Revise your plan and update it on a regular basis.

Did You Know? Fifteen percent of youth spending is done on the Internet, and boys do more on-line spending than girls, according to a recent Harris poll.

¢ Prepare a trial financial plan ¢ Put your plan into action and keep organized records ¢ Evaluate your financial plan periodically

Adjusting Your Plan How are your financial goals likely to change over the years?

Insurance Basics ¢ Insurance is based on the principle of risk, which is the probability that an event will occur. ¢ Insurance protects people from the cost of car accidents, health care, loss of property, accidents, injury to others, and loss of income because of death or disability.

Terms ¢ Premium – cost for insurance coverage ¢ Deductible – the portion of each claim for which the insured person is responsible

How Much Will It Cost? ¢ Law of averages ¢ Number of people sharing the risk ¢ Cost of claims in the past ¢ Characteristics of the individual ¢ Value of what is insured ¢ Amount of the deductible ¢ State regulations

Careers Assemble the following information to help complete a job application: Identification ¢ Employment History ¢ Education and Certification ¢ Special Skills ¢ References ¢

Unit Review 1. 2. 3. 4. What are the basic steps in a financial plan? Why should you make periodic adjustments to your financial plan? What are the basic principles of insurance? What factors determine insurance premium costs?