Copyright Goodheart-Willcox Co., Inc. 7 Section 1.1 Introduction to Financial Literacy The average high school graduate can expect to earn just over $1 million in a lifetime. College graduates will earn more than $2 million. However, no matter how much you earn, you may not meet your financial needs if you do not have a plan for your future. It depends on your goals, expected income, and age. To achieve your goals, financial planning is essential in every phase of life. It is an evolving and ongoing process that can take you from where you are to where you wish to be financially. It is largely a matter of balancing money coming in and money going out over time. Some of the benefits of financial planning are shown in Figure 1-1. A financial plan is an overview of an individual’s current financial position and strategies to meet future financial aspirations. Creating a plan starts with analyzing your needs and wants, values, and ethics. It also takes into consideration your personal priorities, standards, and available resources. Needs and Wants Needs are necessities a person must have to survive. Examples include physical needs for food, clothing, and shelter. You also have psychological needs for a sense of safety, security, love, acceptance, approval, and success. Wants are things that a person desires but can live without. For instance, you may want the latest smartphone or a ten-speed racing bike. However, these things are not necessary for your survival. Goodheart-Willcox Publisher Figure 1-1 Financial planning has many lifelong benefits. The United States Environmental Protection Agency (EPA) is a governmental organization with a mission to protect human health and the environment. The EPA is a rich resource of information on environmental issues, such as pollution, climate change, protecting wildlife, and hazardous waste disposal. Visit the EPA’s website to learn more about what individuals and businesses can do to preserve the Earth. Green Environmental Protection Agency Benefits of Financial Planning • Use financial resources effectively • Set and achieve goals for your future • Protect finances by making smart decisions • Achieve and maintain control of your life • Be prepared for emergencies • Accumulate wealth • Enjoy freedom from financial worry