Personal Finance and Career Choosing PDF

Personal Finance and Career Choosing How to make the most of our economic decisions Contents Week’s Objectives Essential Questions Understanding Major Concepts What is Financial Planning? Other aspects of financial planning The changing labor force What will affect your...

Personal Finance and Career Choosing How to make the most of our economic decisions Contents Week’s Objectives Essential Questions Understanding Major Concepts What is Financial Planning? Other aspects of financial planning The changing labor force What will affect your choice of occupation? Week’s Objectives By the end of this week, you will: Establish financial goals and prepare a financial plan Understand the importance of the budget as money management tool Plan a sample budget Understand that financial goals involve both trade-offs and opportunity costs Understand the importance of saving and investing, wise buying, risk management, and career planning in addition to budgeting. Week’s Objectives Evaluate your own goals, interests, and abilities. Explore factors limiting occupational choices Discuss the relation between education and jobs Key Terms Key Terms Essential Questions – Diagnostics (T/F) Please answer the following questions: A budget is a plan to help an individual understand how and where to use money. People with small incomes have no need for budgets When we are deciding how to spend our money, our needs should take priority over our wants. A family has certain fixed expenses that it must meet Families at all income levels spend about the same proportion of their income on necessities and luxuries Essential Questions – Diagnostics (T/F) Please answer the following questions: The labor force is made up of all those people who currently have jobs Women make up about half of the workforce today A white-collar worker is someone who wears a white collar at work The percentage of workers in the labor force who are in service industries is increasing. How much an individual will earn in a lifetime has little to do with that person’s education. Major Concepts: Consumer Credit A financial plan shows how to achieve financial goals. A budget is an important tool for maximizing one’s income. A budget should be flexible Trade-offs are made and opportunity costs paid in all budgets Quick Question: What is then a financial plan? Financial Plan A financial plan is a kind of road map of your financial future. It shows you how to achieve your financial goals. By following the steps described below, you should be able to tailor a plan especially suited to your needs. These are: Define those personal goals that will cost money Determine the cost of achieving these goals and a plan for obtaining the necessary money. Prepare a budget Set aside savings Financial Plan Invest wisely Buy necessary insurance Shop wisely and use credit wisely Quick Question: How does one define financial goals? “If you don’t know where to go, you won’t know how to get there” Defining Financial Goals Setting personal goals involves identifying what it is that you would like to do in the future—in both the long term and the short term. Most of your goals will probably involve spending money. Goal-setting gives you targets to shoot at. It is part of your financial plan. Goals: Short Terms vs. Long Terms Short-term goals are those that you would like to achieve in a year or less. Would you like to vacation out of town, buy an expensive item of clothing, or purchase a piece of electronic equipment? If you could save the money that you would need to pay for these things in a year or less, we would call them short-term goals. Goals that will take you more than a year to achieve are long term goals. An automobile of your own and going to a post-secondary school are the kinds of long-term goals that high school students might be thinking about. As you grow older and leave high school, some of those former “long-term goals” become the short term variety. Goals: Short Terms vs. Long Terms VERY IMPORTANT: As you grow older and your lifestyle changes, new goals will come forward. As you pass through different stages in life, you may think about getting married, start a family, having children, get an insurance to protect yourself and those loved ones against family risks, money to pay for your children education and fund for your own retirement. Like those earlier long-term goals, it will take careful planning and years of saving and investment to achieve them. Goals Worksheet Sample Quick Question: How does one prepare a Budget? Defining the Concept of Budget A budget is a financial plan that summarizes income and expenditures over a period of time. Creating a budget gives you an idea of where you stand financially. It tells you what your overall income is. It shows your total expenses After creating a budget, you will know how much you can save or how much you will be going in debt each month. Determining one’s financial situation As a first step in preparing a budget, write down every purchase you make and everything you earn in the course of a month. Then organize the results in a “budget worksheet” Recording your income and expenses in this way will help you to see if you are living beyond your means, find problem areas, and know how much you can set aside in savings. Other Aspects of Financial Planning INVESTING Make your money work for you! For those purposes, you may want to consider investing in financial vehicles (tools) such as savings bonds, mutual funds, and other securities. Stocks too! Other Aspects of Financial Planning Choosing and Preparing for a Career In today’s job market, employers expect both a good education and some extra preparation in the form of job knowledge and skills. It is good to know beforehand: (1) which career fields offer the best opportunities, and (2) how you can acquire the skills that businesses and organizations in that field want from their employees. Other Aspects of Financial Planning Managing Risk With and Without Insurance “Risk management” involves identifying what risks you and your family are exposed to and what you can do to manage them. “Risks” include things like loss of life, accident, illnesses, damage to property, and personal liability. Insurance enables many people and institutions in similar circumstances to share the cost of specific risks. Good financial planning calls for the budgeting of some money for buying insurance. Defining “Labor Force” As soon as you take some action to find a job, you have entered what is commonly called the job market, or the world of work. Economists would say that you are now part of the labor force. In most countries, all persons 16 years of age and older who are either working or looking for work are part of the labor force. The labor force therefore includes people who have jobs as well as some who do not. Changes in the Labor Forces First Factor: Number of Workers The size of the labor force has increased. In 1960, the total population in the U.S. was 180 million people. Of this total, 75 million people were in the labor force. By 2022, the population has increased 77%, to 318 million people, and the labor force had grown 107 %, to 155 million people. As the population grew, the U.S. economy also expanded, so more jobs were available for more people. Changes in the Labor Forces Second Factor: Age of Workers Although the labor force could include everyone 16 years old and older, not all 16-year-olds immediately enter the labor force. Instead, many people between the ages of 16 and 24 are choosing to stay in school. Also, many people over 55 are taking advantage of retirement possibilities, and the number of retirees is likely to increase. Thus, the 25-to-54-year-old age group will increase greatly as a percentage of the total labor force. Changes in the Labor Forces Third Factor: Sex of Workers In 1960, fewer than 40 percent of women 16 years of age and older were in the labor force. Now, however, almost 60 percent of women over 16 are part of it. Moreover, their participation in the labor force is expected to increase even more, to reach almost half. Women still are scarce in certain occupations such as the construction industry, where they make up only about 10% of the workforce of that industry. Changes in the Labor Forces Fourth Factor: Migrant Workers, and Illegal Aliens An immigrant is an individual who goes from one country to another. The United States is a nation of immigrants. Therefore, the labor force in this country has always consisted of large numbers of immigrants. They play important roles in the economy, some bringing valuable skills with them. Changes in the Labor Forces Immigration laws, however, have long limited the number of immigrants allowed in. The labor force also includes many illegal aliens. This is a person who enters the country without the permission of the government or who enters with permission to stay a limited period of time and remains in this country beyond that time. Migrant workers generally work at agricultural jobs that are seasonal. Defining “Occupation” One’s occupation is what one does to earn a living. Other definition: a group of jobs or job clusters in which workers perform similar tasks, duties, or activities at similar skill levels. We know these as occupational clusters. Within each cluster there is a wide range of jobs, including just about every job currently available. U.S. Department of Labor Occupational Clusters Types of Occupations There are generally four types: White-collar workers Blue-collar workers Service occupations Farm occupations Types of Occupations White-collar workers are people in the professional, technical, managerial, and sales categories. The term “white collar” originated many years ago when men wore white shirts and women wore white blouses on these jobs. Blue-collar workers are employed in the textile mills, steel and auto plants, transportation, heavy machinery, and machine tool industries. At one time, these workers wore sturdy work clothes made of blue denim. Thus, they acquired the name blue-collar workers. Types of Occupations People in service occupations include government workers, hospital employees, fire fighters, building service workers, and hotel and restaurant workers. Farm occupations include farmers as well as farm managers and laborers. Changes In Occupations White-collar and service workers account for increasingly larger percentages of the total labor force. The percentage of workers in blue-collar manufacturing jobs has declined in recent decades. The number of farming, fishing, and forestry workers is less than half what it was 30 years earlier. These changes can be explained by the following three factors: Changes In Occupations First Factor: Where Goods and Services Are Produced Now there is less of a demand here for blue-collar workers in industries making shirts, blouses, or sneakers. On the other hand, there is a greater demand than previously for white-collar workers to market, sell, finance and ensure foreign products sold in the United States and any other country. Changes In Occupations Second Factor: The Aging of Our Societies People are living longer today. As people live longer, there is a greater need for facilities and personnel to care for this aging population. The need for workers to service retirement communities and leisure activities has increased to meet this growing need. Thus, there is a greater demand for health-care workers— doctors, nurses, medical assistants, social workers, and office and support staff. These are mostly white-collar jobs. Changes In Occupations Third Factor: How Goods Are Produced More shifts are expected in job opportunities in the future because of technological innovations. Computers and computer-driven equipment has become part of everyday business and manufacturing. More workers are needed in computer industries to develop, manufacture, and service their complex equipment. Machines, computers, and robots are now doing many of the jobs in these industries. Changes In Occupations But the number of workers in finance, retail trade, and other services industries will increase greatly. Occupations that require more education and training generally are projected to grow the fastest. Job opportunities are expected to decline rapidly in textiles, farming, and certain operator and assembly occupations. On the other hand, many more workers will be needed in computer-related, travel, and health-care occupations Growing Demand for Workers With More Education One sign that a nation’s economy is healthy is that a good number of its occupations are growing and flourishing. Many new occupations have been created in the world in recent decades. Some of these involve designing, programming, operating, and servicing the new machines and computers. These are the high-tech (high-technology) industries. Growing Demand for Workers With More Education You may want to prepare yourself now for one of the better- paying jobs in a field where workers will be in demand in the future. Preparation will probably require an education. Education pays off! And this is why: High school dropouts – high school graduates – College/university dropouts – College/university graduates – Masters diploma – PhD – Post PhD Growing Demand for Workers With More Education Factors that May Limit Your Choices First Factor: Availability of Jobs The job that you want may or may not be there when you want it, for three reasons. First, the types of jobs in the labor force are changing, as you have seen. Second, some jobs are only seasonal. Third, it is easier to get work when the country is enjoying good business times than when business conditions are bad. Factors that May Limit Your Choices Second Factor: Availability of Jobs Some jobs are available only in certain areas. For example, if we refer to the U.S., the movie and television industries are located mainly in California and New York. If you want a job in an industry that is not located near you, you must be willing to move to the area where such jobs are available. Factors that May Limit Your Choices Third Factor: Discrimination Job discrimination because of race, ethnic background, age, or sex is illegal. Nevertheless, discrimination has affected many people now in the labor force. Fortunately, discrimination is slowly becoming less of an obstacle in determining what people do for a living. Minorities and women occupy leading roles in all aspects of our society. Influences on Your Choice of Occupation Factors that May Enlarge Your Choices KNOW YOUR SELF!!!! To know yourself, you must know your goals, interests, and abilities. Factors that May Limit Your Choices First Factor: Goals Thinking for a while about your goals will probably help you identify them. Being successful at the kind of work they do is more important than making a lot of money. Factors that May Limit Your Choices Second Factor: Interest You are more likely to succeed at an occupation if you enjoy and are interested in your work. But suppose, like many high school students, you do not know what your interests are. What then? You may take a vocational preference test. This will help you figure out your points of interest. You may continue to explore your interests, find a part-time job or volunteer for work in a field that interests you, read and research in different career areas. Factors that May Limit Your Choices Factors that May Limit Your Choices Third Factor: Abilities Our abilities come from two sources: our talents and our skills. Talents are those abilities that we seem to come by almost naturally—they are a part of us. Skills are those abilities that we develop through training or study. In most instances, it would be wise to develop skills that are related to our talents. Career Paths After High School