Essential Questions

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.

2. Essential Questions • What are the steps in goal setting and decision making? • How do individuals needs, wants, values, standards, and priorities affect financial goals and decisions?

3. FINANCIAL GOALS • Financial 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: • Specific • Measurable • Attainable • Realistic • Time-bound

4. Decision Making Steps • Identify the problem & decision to be made • Identify resources and gather information • Identify the options (alternatives) *team members brainstorm • Identify the pros and cons of each option • Choose the best option • Put the decision into action..just do it! • Evaluate the outcomes of the decision

5. Six Steps in Economic Decision- Making Process Do the Positives (+) outweigh the Negatives (-)? Disadvantages + Advantages Use T-account to determine positives and negatives

6. Good Decision Making • Following 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!

7. FACTORS THAT AFFECT FINANCIAL DECISIONS • Family factors • Cultural factors • Social factors • Societal and demographic factors • Economic factors • Technology • The media • The marketplace • Legal and moral factors • Personal factors

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

9. Principles of Financial Planningfrom the Jump$tart Coalition • Money doubles by the “Rule of 72” • Your credit past is your credit future • Start saving young • Stay insured • Budget your money • Don’t borrow what you can’t repay • Map your financial future • Don’t expect something for nothing • High returns equal high risks • Know your take-home pay • Compare interest rates • Pay yourself first http://www.jumpstartcoalition.org/files2010/2010_J$_Calendar.pdf

10. Factors Affecting Decisions • Family structure • Income level • Lifestyle • Size • Age • Stage of life cycle • Health status • Emergencies

11. Cultural factors • Cultural and ethnic groups impact • Values • Beliefs • Lifestyle • Family structures • Clothing choices • What are the advantages and disadvantages of cultural diversity within a family, a school, a workplace, a community?

12. Social factors • Education level • Family structure • Immigration • Ethnicity • Rural, urban, suburban community • Peer pressure • Community relationships and involvement

13. Societal and Demographic Factors • Demography is the statistical characteristics of a population • Age • Sex • Race • Birth, marriage, death rates • Where people live

14. Economic Factors • Employment rate • Kind and number of jobs available • Inflation • A period of rapid increase in the price of goods and services • Recession • An extended period of slow economic growth * Review the Business Cycle-prosperity, recession, depression, recovery • Government Regulations & Spending • Fiscal policies affect personal & business spending Cash for clunkers, stimulus $, tax rates

15. 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 impacts • Training needs • Replacing obsolete technology • Types of jobs available

16. 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 include • Internet • Television • Voice, text, & data transmissions • Publications

17. The Marketplace • Supply • Goods and services available to the consumer • Demand • Consumer desire to purchase as compared to availability • Market response • How quickly the market adjusts to supply versus demand

18. Legal and Moral Factors • Laws that impact spending • Taxation • Investment and Retirement Accounts • Insurance requirements • Beliefs 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

19. Personal Factors • Needs • Items to survive – food, clothing, & shelter • Wants • Not essential but desirable – cell phone, Music CDs, • Values • A person’s belief about what is important and desirable