1.02 factors affecting financial decisions burns

1. Decision Making Magic Good decisions lead to the achievement of goals & a feeling of self-control & self confidence Good decisions are a key to successful independent living

2. Decision Making Magic 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

3. Financial Decisions Impacts an individual’s or family’s well-being Well-being is the state of being happy, healthy, and prosperous For example… Saving for a family vacation Spending money wisely Purchasing new items

4. Decision Making Process It guides individuals to think through all components of making a good decision STEPS: 1. Identify the problem 2. Identify resources & gather information 3. Identify the options (alternatives) 4. Identify the pros & cons of each option 5. Put the decision into action - Decide 6. Evaluate the outcomes of the decision

5. Steps Identify the decision to be made Know the problem or question before searching for an answer Which car should I buy?

6. Steps 2. Identify resources & gather information Search and compare information related to the decision $30,000 $10,000

7. Steps 3. Identify the options (alternatives) Loans New vs. Used Gas Mileage

8. Steps 4. Identify the pros & cons of each option A reason in favor of an option: a potential benefit A reason in opposition to an option; a potential limitation or weakness

9. Steps Continued 5. Choose the best option Make the best choice after thinking about all of the consequences 6. Put the decision into action 7. Evaluate the outcomes of the decision This will help you make better decisions in the future

10. Benefits of Good Decision Making When decision making skills improve, quality of life is enhanced Making better choices to your decisions results in better use of time, money and other resources

11. Factors that affect financial decisions $ $

12. 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

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

14. Cultural factors Cultural - related to the traditions, beliefs, roles, & communication styles of a group Cultural and ethnic groups impact Values – fundamental beliefs or practices about what is desirable, worthwhile, & important Beliefs Lifestyle Family structures Clothing choices

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

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

17. 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

18. 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

19. 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.

20. 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

21. 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

22. 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 – 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