PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.
-
Upload
ashlie-young -
Category
Documents
-
view
218 -
download
0
Transcript of PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.
![Page 1: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/1.jpg)
PERSONAL FINANCE AND ECONOMICSChapter 20
![Page 2: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/2.jpg)
Section 1
Managing Your Money
![Page 3: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/3.jpg)
Consumer Rights
Consumers have rights, or protections, in the free enterprise system.
A consumer is someone who buys a good or service.
![Page 4: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/4.jpg)
Two Types of Income
Consumers have two types of income to spend:
– Disposable Income: money left after taxes are paid
– Discretionary Income: money left after bills are paid and after all necessities have been bought and paid for
![Page 5: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/5.jpg)
Protecting Consumer Rights
Consumerism: a movement to educate buyers about the purchases they make and to demand better and safer products from manufacturers
– Laws (ex. Pure Food and Drug Act)
– Private groups (Better Business Bureau)
![Page 6: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/6.jpg)
Consumer Bill of Rights
– Right to a safe product
– Right to be informed
– Right to choose
– Right to be heard
– Right to redress
![Page 7: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/7.jpg)
Consumer Responsibilities
Consumers have responsibilities as well as rights.
![Page 8: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/8.jpg)
Smart Buying Strategies
– Gather information
– Use advertising carefully
– Determine the best value
– Comparison shopping is a buying strategy to get best buy for the money
– Look at brand name and generic items
– Balance costs and benefits
![Page 9: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/9.jpg)
Other Responsibilities
– Initiate problem-solving process for faulty goods or services
– Keep warranty information
– A Warranty is the promise made by a manufacturer or a seller to repair or replace a product within a certain time period if it is faulty
– Respect rights of producers and sellers
– Report problems to government when a settlement cannot be reached
![Page 10: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/10.jpg)
Making Buying Decisions
Buying a product or service costs more than money; it also costs the time it takes to make the purchase and the opportunity cost of not buying something else.
![Page 11: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/11.jpg)
Making Buying Decisions
Many factors are involved in consumers’ buying decisions.
Steps:– Decide whether to buy
an item or not
– Invest time obtaining product information
– Balance opportunity cost
![Page 12: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/12.jpg)
Section 2
Planning and Budgeting
![Page 13: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/13.jpg)
Making a Budget and Sticking To It!
A budget is a record of money earned and spent to help you match expenses to income.
![Page 14: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/14.jpg)
Basic Budgeting Terms
– Income is money received from labor, business, or property
– Expenses is money spent on goods and services
– Balance: leftover money
– Surplus: More income than expenses (good)
– Deficit: More expenses than income (bad)
![Page 15: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/15.jpg)
How To Make A Budget
List what you spend.
Record what you earn.
Analyze the data. Try to have
surplus. Monitor spending.
![Page 16: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/16.jpg)
Credit
Credit can be a valuable item in your financial toolbox; however, as with all tools, you have to know how to use it correctly.
![Page 17: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/17.jpg)
Credit
Credit is money borrowed to pay for a good or service
Credit allows consumers to receive a good or service and pay for it later.
![Page 18: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/18.jpg)
Recognizing Credit Terms– A lender gives money to a borrower.
– A lender charges interest, expressed as the annual percentage rate (APR).
– APR is the annual cost of credit expressed as a percentage of the amount borrowed
– A credit rating evaluates how well the borrower will repay the loan.
– The borrower may pledge collateral for the loan.
– Collateral is property or valuable item serving as security for a loan
![Page 19: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/19.jpg)
Sources of Credit
– Usually require down payment
– Banks, savings and loans, credit unions, finance companies offer credit
– Most common—credit cards
– Can charge high interest rates
![Page 20: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/20.jpg)
Benefits of Credit
Allows you to get what you want sooner
Teaches financial discipline
![Page 21: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/21.jpg)
Drawbacks to Credit
Spending more than you can afford
Bankruptcy is the inability to pay debts
Poor credit rating
![Page 22: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/22.jpg)
Your Responsibility As A Borrower– Have a plan to
make payments
– Use budget skills
– Understand credit agreement
![Page 23: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/23.jpg)
Section 3
Saving and Investing
![Page 24: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/24.jpg)
Saving For The Future
To save is to set aside income for later use.
![Page 25: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/25.jpg)
Why Save?
– Money for large purchases
– Emergency aid
– Luxuries
– Benefits the whole economy
![Page 26: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/26.jpg)
Saving Regularly
– Automatic deposits into savings accounts
– Budgeting for savings
– Earning interest by saving through financial institutions
– Interest is the payment people receive when they lend money or allow someone else to use their money
![Page 27: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/27.jpg)
Deciding About Your Saving– Trade-offs:
Less to spend today
More to spend tomorrow
![Page 28: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/28.jpg)
Types of Savings
Many ways exist for people to save portions of their incomes.
![Page 29: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/29.jpg)
Savings Accounts
Savings accounts– Earn low interest
on principal
– Financial institutions loan the money to others
![Page 30: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/30.jpg)
Checking Accounts
Checking Accounts
– Money for purchases
– Must keep careful records
– Debit cards allow paperless money transfer
![Page 31: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/31.jpg)
Money Market Accounts
– Money Market Accounts
Allows you to write checks, like a checking account
Pays interest like a savings account
![Page 32: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/32.jpg)
Certificates of Deposit
– Certificates of Deposit
Type of time deposit
Agreement to leave money in financial institution for a set amount of time
![Page 33: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/33.jpg)
Investments
Making wise investments in a variety of stocks and bonds is an important part of achieving long-term financial goals.
Investing in stocks and bonds leads to higher returns than other types of savings.
Returns is the profit earned through investing
![Page 34: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/34.jpg)
Stocks
– Shares of stock provide partial ownership in a company
– A stock is an ownership share of a corporation
– Stock prices may go up or down, based on company performance.
– Investors may earn dividends.– Dividend is the payment of a
portion of a company’s earnings
– Higher possible return, but at greater risk
![Page 35: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/35.jpg)
Bonds
– A bond is a contract to repay borrowed money with interest at a specific time in the future
– Loans money to company or government
– Pays set rate of interest over several years
– U.S. government bonds are a very safe investment.
![Page 36: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/36.jpg)
Mutual Funds
– Mutual Funds are pools of money from many people who are invested in a selection of individual stocks and bonds chosen by financial experts.
– Pools money to invest in different stocks and bonds
– Chosen by financial experts
– Less risk than investment in individual stocks
![Page 37: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/37.jpg)
![Page 38: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/38.jpg)
Section 4
Achieving Your Financial Goals
![Page 39: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/39.jpg)
What Kind Of Spender Are You?
Careful spenders avoid pitfalls, such as impulse buying, on their way to meeting their financial goals.
Impulse buying is purchasing an item on the spot because of an emotional rather than planned decision
Setting financial goals can help you spend money wisely.
Evaluate your spending to help you meet financial goals.
![Page 40: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/40.jpg)
Impulse Buying
Beware of impulse buying.
– Try not to buy too quickly based on emotions.
– Some impulse-buying is okay. Too much is bad.
– Follow guidelines to avoid too much impulse buying.
![Page 41: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/41.jpg)
Your Goals and Your Buying Decisions
The buying decisions you make can have a major impact on your life and career choices.
Consider goals when buying items.
![Page 42: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/42.jpg)
Now or Later?
Long-term goals can conflict with short-term goals.
Must balance long and short-term goals.
Long-term planning can improve finances down the road (e.g., saving for college will lead to higher income later)
![Page 43: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/43.jpg)
![Page 44: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/44.jpg)
Chapter Summary
![Page 45: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/45.jpg)
Buying Strategy
Making consumer decisions involves deciding the following:
• whether to spend your money
• what you will purchase
• how to use your purchase
Comparison shopping involves making comparisons among brands, sizes, and stores.
![Page 46: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/46.jpg)
Consumerism
Consumer Rights Include: the right to safety
the right to be informed
the right to choose
the right to be heard
the right to redress
![Page 47: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/47.jpg)
Budget
• A budget is an organized plan for spending and saving money.
• What you do with the information in a budget is up to you. No one can force you to spend less and save more unless you want to.
![Page 48: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/48.jpg)
Credit
• When buying on credit, the amount you will owe is equal to the principal plus interest.
• Financial institutions that provide credit include commercial banks, savings and loan associations, and credit unions.
![Page 49: PERSONAL FINANCE AND ECONOMICS Chapter 20. Section 1 Managing Your Money.](https://reader036.fdocuments.in/reader036/viewer/2022081513/56649dff5503460f94ae7e2c/html5/thumbnails/49.jpg)
Saving and Investing
• It is important to get into the habit of saving.
• Individuals have many places to invest their savings, including savings accounts and certificates of deposit.
• Shares of stock entitle the buyer to a certain part of the future profits and assets of the corporation that is selling the stock.