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Finance Notes - Financial Planning

Why do some people seem to live comfortably while others can never find financial peace?

2 major parts of a budget are... Income and Expenses (2 kinds of expenses are... Fixed and variable )
 * Where does your money go?**
 * Fixed expenses do not change month to month - example: tuition or rent
 * Variable expenses can change month to month - example: gas or utility bills
 * THE MOST IMPORTANT EXPENSE = SAVINGS!!!!!!!!!
 * When you create a budget, you want income and expenses to match!
 * If the difference between income and expenses is positive - add more to savings!
 * If the difference between income and expenses is negative - you are overspending!

Make a list of your needs and another list of your wants. Values are what we believe - often what we have been taught - to be important.
 * Needs vs. Wants** (Food, shelter, clothing, are needs. Fast food and expensive sneakers are wants)

Goals must be S M A R T (specific, measurable, attainable, realistic, and time bound) Short term goals = three months or less Intermediate goals = 12 months or less Long term goals = 1 year or longer
 * Goals** - if we don't set goals for the things we want to achieve, we may never reach them.
 * specific means give me facts and details about your goal
 * measurable means give me an exact amount you need to reach this goal
 * attainable means can you tell me exactly how you will reach your goal so we can determine if it is possible
 * realistic means does your goal factor in common sense
 * time bound means you realize and pinpoint exactly when you wish to achieve this goal

How will you decide what goals to set and how will you make good decisions along the way to allow you to reach your goal? Follow these six steps:
 * Decision Making Steps**
 * 1) ID your goal
 * 2) Establish criteria (the what, where, when, and how)
 * 3) Examine your options
 * 4) Weigh the pros and cons
 * 5) Make decision
 * 6) Evaluate the results

What is opportunity cost? This refers to the thing(s) you give up in the meantime while waiting to reach the goal you have set. Going to college COSTS you the opportunity of starting a job sooner, BUT is the right thing to do if your GOAL is to get a college education and then be able to start the career of your dreams later, likely making a higher salary.

What are satellite decisions? Small decisions relating to a larger decision that you've made. Going to college might be a decision you have already made. Satellite decisions might be where to go, housing plans, course of study, etc.

//**Responsible spending is a _ _ _ _ _ _!!!**//

Review page 12 and record four guideline that will help you stick to a plan you have set to reach a goal.