Copyright Goodheart-Willcox Co., Inc. 6 E Q ssential uestion Terms Section 1.1 Objectives After studying this section, you will be able to: • Describe the initial steps for creating a financial plan. • Discuss the importance of setting goals as a part of financial planning. Why is it important to plan your financial future? Planning Your Future Some people always seem to know what they want and where they are going. They seem to know what is important and what is not worth serious attention. This sense of direction and purpose is often a key factor separating the people who achieve what they want from those who do not. The good news is that you can develop this sense of direction and purpose by developing multiple strategies for making choices. Planning your personal finances can help you reach important goals and achieve a sense of financial security over your lifetime. To manage money successfully, you need to be educated about money matters. Financial literacy is the possession of a body of financial knowledge, a set of basic skills, and the ability to apply knowledge and skills to making informed, responsible financial choices. These financial choices should serve both your interests and the larger community and respond to the ever- changing economic environment. Personal financial planning is the process of setting financial goals and developing plans to reach them while meeting financial needs. E Q ssential uestion Introduction to Financial Literacy financial literacy personal financial planning financial plan need want consumer good service values value system ethics priority standard resource goal Monkey Business Images/Shutterstock.com People who are financially competent determine the differences between needs and wants and spend accordingly.