The Decision Making Process MONEY, MONEY, MONEY … Personal Finance Needs/Wants Opportunity Costs The Decision Making Process Taxes Check Writing Tips Diane Jankowski

Needs/Wants/Resources Wants: Things a person does not need to survive, but would like to have (cell phone, computer, cable tv) Needs: Things that you must have in order to survive (food, water, shelter, clothing, love) Resources: Things that people can use to make or obtain what they need or want - limited MUST MAKE A DECISION – Opportunity Cost Diane Jankowski

Opportunity Cost Opportunity cost is what you have to forgo when you choose option A over option B. This must be taken into consideration in order to make the best choice possible. Time Money Space Example: If I choose to go to the football game as opposed to staying home to study, I will not be prepared for the test and therefore get a poor grade. Diane jankowski

Business Businesses supply goods and services to consumers with the motivation to make a profit. The good/service providing must satisfy a customer need or want. Profit = income – expenses (companies try to keep income > expenses) Operating in the red means income < expenses (bad) Operating in the black means income > expenses (good) Companies thrive on competition (the contest between businesses to win customers). How can there be so many pizza places in Lyndhurst? Josie’s – $1.00 a slice - caters to high school students (place order at counter, pay, and eat) Mr. Bruno’s – over $2.00 a slide - caters to business people (sit down, look at menu, waitress takes order, eat, and pay) Diane Jankowski

How much does the average American earn per year? Things to consider: PARADE MAGAZINE Location Education Career www.parade.com/news/what -people-earn/.../salary- guessing-game.html‎ Play the earnings game and see if you can guess Diane Jankowski

Follow the steps below to calculate gross pay, taxes, and net pay MONEY: Gross or Net? Follow the steps below to calculate gross pay, taxes, and net pay 1. GROSS PAY 3. NET PAY The amount you earned Hourly rate X hours worked $5.00 x 10 = $50.00 The amount you take home Gross pay – taxes = net $50.00 - $15.00 = $35.00 2. TAXES Approximately 30% of Gross Pay = income taxes to be paid gross pay X tax rate (remember to move 2 decimal places to the left from the % symbol before calculating) $50.00 x .3 = $15.00 Diane Jankowski

The Decision Making Process Step 1: Identify the situation What decision do you need to make? Step 2: Identify possible courses of action What are all the possible alternatives? Step 3: Determine the pros and cons What are the advantages/disadvantages of each alternative? Step 4: Make a decision How would you rank each alternative/choice based upon the pros/cons? How will you reach your goal? Step 5: Evaluate your decision Have you achieved the results expected? Diane Jankowski

Taxes Taxes (required payment to the government) 1. Income Amount paid based on amount earned (Progressive) Sales % added to purchase price of taxable items 3. Property Amount paid based on value of property (land/house) owned http://www.khanacademy.org/economics-finance- domain/core-finance/taxes-topic/taxes/v/calculating-federal- taxes-and-take-home-pay Diane Jankowski

Check writing lesson Checks are legal documents “Demand Note” Must be paid on demand Post dated checks are illegal if given to the payee on a date prior to the date written on the check Bank will pay the amount written on the line Be sure to sign the check after double- checking the information If you make a mistake, VOID the check (save it) and write a new one Always begin writing the amount close to the left edge on the line and in the box by the $ Only use the word “and” where the decimal point appears Always write cents as a fraction of a dollar (50/100) Always spell out the month and write the full year (2013) in the date Never abbreviate the name of a business or person Diane Jankowski