Section 1.1 Financial Decisions and Goals

 Definition: arranging to spend, save, and invest money to live comfortably, have financial security, and achieve goals.  Benefits

 Determine Your Current Financial Situation  Example Disposable Income

 Develop Your Financial Goals

 Identify Your Options

 Evaluate Your Alternatives Sources of Financial Information Consequences of Choices  Opportunity Cost – What is given up when making one choice instead of another. Understanding Risks  Inflation  Interest  Income  Personal  Liquidity – Ability to easily convert financial assets into cash without loss of value.

 Create and Use Your Financial Plan of Action Increase Savings? = Cut Spending Increase Income? = Get part time job

 Short Term Goals  Intermediate Goals  Long Term Goals

 Service –  Good –  Consumable goods  Durable goods  Intangible items

 Life Situations and Personal Values  Economic Factors Economics – the study of the decisions that go into making, distributing, and using goods and services. Economy – consists of the ways in which people make, distribute and use their goods and services. Supply – Demand –

 Federal Reserve System Central banking organization of the United States. Primary role in the US economy is the regulation of the money supply.  Inflation Rise in the level of prices for goods and services  Consumer Person who purchases goods and services  Interest The price that is paid for the use of another’s money.