Slide 1

Essential Standard 1.00:Understand economic activities of individuals and families.

Objective 1.02 Understand characteristics of financial goals, steps in decision making and factors that affect financial decisions.Essential QuestionsWhat are the steps in goal setting and decision making?How do individuals needs, wants, values, standards, and priorities affect financial goals and decisions?FINANCIAL GOALSFinancial goals are accomplished through and give direction to financial planning. Learning to set financial goals is an important part of learning to live independently. Financial Goals should be SMART:SpecificMeasurableAttainableRealisticTime-bound

Decision Making Steps

Identify the problem & decision to be madeIdentify resources and gather informationIdentify the options (alternatives)*team members brainstorm

Identify the pros and cons of each optionChoose the best optionPut the decision into action..just do it!Evaluate the outcomes of the decision

Do the Positives (+)outweigh the Negatives (-)?5Six Steps in Economic Decision- Making Process + AdvantagesDisadvantagesUse T-account to determine positives and negatives 5Good Decision MakingFollowing logical steps when making decisions helps individuals make informed choices. When decisions are made from habit or on impulse, there is a greater likelihood of negative outcomes.

Good decisions lead to the achievement of goals and a feeling of self-control and self-confidence. Good decisions are a key to successful independent living.Who makes those decisions?Be sure YOU are making the best decisions!

FACTORS THAT AFFECT FINANCIAL DECISIONSFamily factorsCultural factorsSocial factorsSocietal and demographic factorsEconomic factors

TechnologyThe mediaThe marketplaceLegal and moral factorsPersonal factors

Personal Factors BreakdownNeeds and wants Distinguishing wants from needs helps individuals and families set more realistic goals and make better decisions.ValuesUnderstanding and prioritizing values helps individuals and families set goals and make decisions that lead to greater personal satisfaction.Standards --- Measures of quality or excellenceWith regard to standards for success, individuals have different views of what it means to be successful.PrioritiesEach individual or family needs to set priorities by deciding what is more important at any point in time.

Principles of Financial Planningfrom the Jump$tart CoalitionMoney doubles by the Rule of 72Your credit past is your credit futureStart saving youngStay insuredBudget your moneyDont borrow what you cant repayMap your financial futureDont expect something for nothingHigh returns equal high risksKnow your take-home payCompare interest ratesPay yourself first

http://www.jumpstartcoalition.org/files2010/2010_J$_Calendar.pdf

Factors Affecting DecisionsFamily structureIncome levelLifestyleSizeAgeStage of life cycleHealth statusEmergencies

Cultural factors

Cultural and ethnic groups impactValues BeliefsLifestyleFamily structuresClothing choices

What are the advantages and disadvantages of cultural diversity within a family, a school, a workplace, a community?

Social factors

Education levelFamily structureImmigrationEthnicityRural, urban, suburban communityPeer pressureCommunity relationships and involvement

Societal and Demographic FactorsDemography is the statistical characteristics of a populationAgeSexRaceBirth, marriage, death ratesWhere people live

Economic Factors

Employment rateKind and number of jobs availableInflationA period of rapid increase in the price of goods and servicesRecessionAn extended period of slow economic growth * Review the Business Cycle-prosperity, recession, depression, recoveryGovernment Regulations & SpendingFiscal policies affect personal & business spendingCash for clunkers, stimulus $, tax rates

Technology

The use of mechanical or electronic devices to manipulate Information (Computers, Ipads, Fax machines, fiber optics, GPS systems, smart phones) Objects (i.e Robots, automated assembly lines, hybrid cars)On going change impactsTraining needsReplacing obsolete technologyTypes of jobs available

i.e. means "in other words"e.g. means "for example"

Change i.e. to e.g.

The Media

Impacts the ways people and businesses communicate and operate locally, nationally, and globally.Communications that reach large audiences with the aid of publication devices that includeInternetTelevisionVoice, text, & data transmissionsPublications

The Marketplace

SupplyGoods and services available to the consumerDemandConsumer desire to purchase as compared to availabilityMarket responseHow quickly the market adjusts to supply versus demand

no bullets for indented ones---must have 2 per categoryLegal and Moral Factors

Laws that impact spendingTaxationInvestment and Retirement AccountsInsurance requirementsBeliefs in what is right and wrong What is appropriate behavior of employers, employees, and individuals at home, work, and within the community.Charitable Giving and Community Service

beliefs about (instead of in) what is right and wrongPersonal Factors

NeedsItems to survive food, clothing, & shelterWantsNot essential but desirable cell phone, Music CDs, ValuesA persons belief about what is important and desirable