1.02

1. 1.02 Understand characteristics of financial goals, steps in decision making, and factors that affect financial decisions.

2. Characteristics of 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

3. Steps in decision-making • Identify the decision to be made • Identify resources and gather information • Identify the options (alternatives) • Identify the pros and cons of each option • Choose the best option • Put the decision into action • Evaluate the outcomes of the decision

4. Factors that affect financial decisions $ $

5. Family factors Family structure Income level Lifestyle Size Age Stage of life cycle Health status Emergencies

6. 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?

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

8. Societal and demographic factors • Demography is the statistical characteristics of a population • Age • Sex • Race • Birth, marriage, death rates

9. 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 • Government Regulations • Fiscal policies affect personal & business spending

10. Technology • The use of mechanical or electronic devices to manipulate • Information (Ie. Computers, Ipads, Fax machines, fiber optics, GPS systems) • Objects (i.e Robots, automated assembly lines, hybrid cars) • On going change impacts • Training needs • Replacing obsolete technology • Types of jobs available

11. The media • Media • Communications that reach large audiences with the aid of publication devices that include • Internet • Television • Voice, text, & data transmissions • Publications • Impacts the ways people and businesses communicate and operate locally, nationally, and globally.

12. 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

13. 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 Service

14. 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 • Standards • Measures of quality or excellence • Priorities • what is more important at any point in time

15. Principles of financial planning (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