Financial literacy: income and decisions (lesson 1)  (Page 7/9)

II. Multiple choice:

1. An example of a short-term goal is:

1. Buying a new pair of shoes
2. Buying a car
3. Going to college
4. Going on a vacation to Europe

2. An example of a long-term goal is:

1. Working part-time
2. Buying a new video game
3. Graduating from college
4. Saving $25 a week

3. An example of a fixed expense is:

1. Entertainment
2. Groceries
3. Clothes
4. Rent

4. An example of a flexible expense is:

1. Health insurance
2. Loan
3. Saving
4. Dining out

Assessment worksheet (answers)

NAME: _____________________________________________________________

1. Match the following words with their definitions:

• E. An expense that stays the same each month, such as rent or a car payment.

II. Multiple choice:

1. An example of a short-term goal is:

1. Buying a new pair of shoes

2. An example of a long-term goal is:

• c. Graduating from college

3. An example of a fixed expense is:

• d. Rent

4. An example of a flexible expense is:

• d. Dining out

Step 12.- The next activity is relate to the process of decision making in the creation and management of an firm. Present Visual 5 to start students thinking about the basic skills for managing a small business. The students should answer individually or in groups as you wish.

Keep in mind that there are differences between managing money in a business as compared to managing your own personal finances. However, both complement each other; a successful entrepreneur not only has to adequate managed its business finances but also its personal finances.

There are many different kinds of small businesses. Some make products, and some sell services. Some are retail, such as stores that sell to consumers, and some are wholesale, such as manufacturers that produce and sell products to other businesses. Some businesses have employees, and some are just one person.

Step 13.- Visual 6 shows some possible answers given by students. However mention that no matter what kind of business you have, there are six basic skills you’re probably going to use every day: (1) Planning, (2) buying, (3) producing, (3) selling, (4) tracking, and (5) managing. Present and briefly discuss the six skills using Visual 7 .

Skill 1: Planning means thinking in a business plan. The purpose of a business plan is to serve as a roadmap for the present and a vision of the future. It can also help to attract investors for your business. Review your business plan twice a year to see if it still fits your company or if you need to make changes to your strategic direction. Here are key components of what the plan should include:

• Executive summary – business concept, key success factors, and financial situation/needs.
• Company profile – vision statement and mission statement.
• Products and services – product/service description, positioning of products/services, and competitive evaluation of products/services.
• Competitive analysis – industry overview, competition, competitor products and services, opportunities, and threats and risks.
• Market analysis – market overview, market segments, and target market and customers.
• Strategies and risks – key strengths and weaknesses compared to your competitors, business strategy and action plan.
• Management qualifications and operations – key personnel, organizational structure, product/service delivery, customer service/support and facilities.
• Financial information – assumptions and comments, starting balance sheet and projection, profit-and-loss projection, cash flow projection, and ratios and analyses.