this homework for Adrian Monroe so please don't send me MSG

CHAPTER OVERVIEW

This chapter provides the foundation for Personal Finance and the study of financial planning. The chapter starts with a discussion of an overview of the financial planning process. Next, the opportunity costs, or trade-offs, of decisions are considered in relation to personal and financial resources. This is followed by coverage of the personal, social, and economic factors that make up the financial planning environment. Next, the main components of financial planning (obtaining, planning, saving, borrowing, spending, managing risk, investing, and retirement and estate planning) are discussed. Finally, strategies for creating and using a financial plan are introduced.

LEARNING OBJECTIVES

CHAPTER SUMMARY

After studying this chapter, students will be able to:

Obj. 1	Analyze the process for making personal financial decisions.	When making major financial decisions, use a variety of information sources to implement the personal financial planning process: (1) determine your current financial situation, (2) develop financial goals, (3) identify alternative courses of action, (4) evaluate alternatives, (5) create and implement a financial action plan, and (6) review and revise the financial plan.
Obj. 2	Develop personal financial goals.	Financial goals should (1) be realistic; (2) be stated in specific, measurable terms; (3) have a time frame; (4) indicate the type of action to be taken.
Obj. 3	Assess personal and economic factors that influence personal financial planning.	Financial decisions are affected by personal factors (income, household size, health, values, and goals), social factors (demographic trends and government actions), and economic factors (prices, interest rates, and employment opportunities).
Obj. 4	Calculate time value of money situations associated with personal financial decisions.	Every decision involves a trade‑off; the selection of one alternative prevents the selection of another. Personal opportunity costs may include time, effort, and health. Financial opportunity costs are based on the time value of money. Future value and present value calculations enable you to measure the increased value (or lost interest) that results from a saving, investing, borrowing, or purchasing decision.
Obj. 5	Identify strategies for achieving personal financial goals for different life situation.	Successful financial planning requires specific goals combined with spending, savings, investing, and borrowing strategies based on your personal situation and various social and economic factors.