Unit 1: Planning Personal Finances
Chapter 1: Personal Financial Planning
Personal financial planning means managing your money (spending, saving, and
investing) so that you can achieve financial independence and security.
The six steps of financial planning are: (1) Determine your current financial situation; (2)
develop financial goals; (3) identify alternative courses of action; (4) evaluate
alternatives; (5) create and use your financial plan of action; and (6) review and revise
The most important factors that influence personal financial planning are your life
situations, your personal values, and outside economic factors.
For all your financial decisions, you must make choices and give up something. These
opportunity costs, or trade-offs, can be personal or financial.
The eight strategies for achieving your financial goals and avoiding money problems are:
Obtain, plan, spend wisely, save, borrow wisely, invest, manage risk, and plan for
Chapter 2: Finances and Career Planning
Personal issues to consider when choosing a career include your aptitudes, interests,
personality, and current personal situation.
The more education and training you have, the greater your potential earning power will
be. Also, the field of study you select will affect your salary.
Employment opportunities are affected by social influences, such as demographic trends,
geographic trends, and economic factors, as well as industry and technology trends.
Gain experience through part-time work, volunteer work, internships, cooperative
education, and class projects.
To evaluate career opportunities, use sources such as the Internet, libraries, newspapers,
school guidance offices, community organizations, and networking with people
working in the field you choose.
Financial issues to consider when looking for employment are your starting salary,
opportunities for promotions and raises, benefits, and the cost of living. Legal issues to
consider relate to the work environment of the company, its adherence to laws
regarding discrimination, minimum wage, unemployment insurance, Social Security,
and workers’ compensation.
Chapter 3: Money Management Strategy
There are opportunity costs, or trade-offs, in all decisions. When you make a decision
about how to manage your money, you remove the option to use the money in a different
Organizing your financial documents makes it easier to plan and measure progress,
handle routine money matters, know how much money is available, and make effective
You can organize financial documents in home files, a safe-deposit box, and on a