E CS 14

Financial Responsibility and Money Management

Responsible personal finance decisions are based upon reliable information and used to reach personal goals.

Content Statement

14. A personal financial plan includes financial goals and a budget, including spending on goods and services, savings and investments, insurance and philanthropy.

Content Elaborations

A personal financial plan is designed to enable an individual to reach a goal. For a young person, it could be the steps to make a purchase such as music system or a car. It might be to make a trip or to pay for a college education. An adult might use a financial plan for short- and long-range goals.

Short-range goals would be those to be obtained within a year. These might include purchasing an appliance, new tires for a car or taking a vacation. Long-range goals take longer, such as saving to purchase a house, pay for a child’s college education or saving for retirement.

A personal financial plan includes a budget that estimates the income and expenses over a specific period of time. A budget can be used to manage spending and achieve financial goals. Long-range plans involve strategies for savings (e.g., passbook savings accounts, money-market accounts, time deposits, certificates of deposits).

Investments are intended to maximize savings (e.g., bonds, U.S. Treasury securities, stocks, mutual funds) but do involve greater risks.

Insurance is a way to protect the goals of an individual’s financial plan. Generally, the most common insurance plans are life, health, automobile and home.

Many personal financial plans include philanthropic giving (e.g., donations to a religious or nonprofit organization throughout one’s life or after one’s death).

Long-term financial goals include retirement and estate planning. How an individual accumulates wealth over time for retirement purposes and makes decisions on how that wealth will be distributed following his or her passing are important financial goals.

Expectations for Learning

Develop a financial plan that includes both short- and long- term goals within a budget, including spending on goods and services, savings and investments, and insurance and philanthropy.