Overview Unit 1: Personal Finance...Unit 1: Personal Finance Overview Section 1.2 - Managing Your...
Transcript of Overview Unit 1: Personal Finance...Unit 1: Personal Finance Overview Section 1.2 - Managing Your...
Unit 1: Personal Finance OverviewSection 1.2 - Managing Your Personal Finances
Objectives
● Discuss the various factors that influence financial decisions
● Apply management principles to achieve your important goals
Case Study: Managing Decisions
Directions: With one other student, complete the following….
1. Create a Google Doc and include both of your names at the top2. Number and answer each of the 4 questions listed after reading the
scenario3. Discuss and provide appropriate responses to each4. Note: the grade given on this assignment will apply to both individuals
Scenario ->1. What is the trade-off if
Maurice decides to keep
his job?
2. What is the cost-benefit
analysis if he decides in
favor the play?
3. What other alternatives
might Maurice have?
4. How would you resolve
Maurice’s goal conflict if
this were your decision?
Maurice wants the male lead in the school play. The problem is that rehearsal is held for two hours every weekday afternoon for the next three months. If he gets the lead, he must quit his after-school job at the mall. If he quits now, the manager probably would not hire him for full-time summer work. Maurice desperately needs the income to help his family pay medical bills.
Since he is a senior, this is Maurice’s last chance to be in a high school production. The best actors in the spring play are sometimes chosen for Summer Theater. This often leads to a career in drama, which Maurice has always wanted.
Making Financial Decisions
● Out of habit○ Do you automatically shop at the
same stores?
● On impulse○ Did you ever accept an invitation
to do something and then discover
you had already promised to do
something else at the same time?
● By failing to act○ Have you earned a poor grade by
not studying for an exam?
Cost-Benefit AnalysisDefinition - a method of weighing the costs against the benefits of an action, a purchase, or a financial decision
● If it is in your interest to take an action or make a purchase, the benefits are greater than or equal to the cost(s)
Marginal AnalysisDefinition - measures the added benefit, versus the added cost, of one more unit of a product
● Marginal Benefit - the change in total benefit of use one additional unit
● Marginal Cost - the change in total cost of using one more unit
Example: “Hungry Apple”
Trade-Offs and Opportunity Costs
Trade-Offs - the choice you give up when you make one choice over another.
❏ Example: ❏ When you spend $50 to buy a jacket❏ Trade-off = what else could you have use
the $50 for?
Opportunity Costs - the value of the option you gave up
❏ Can be measured in:❏ Dollars❏ Time ❏ Enjoyment
Systematic Decision-Making
Definition - a process of choosing a course of action after evaluating available information and weighing the costs and benefits of alternative actions and their consequences
Step Keyword Approach
1 Problem Define the problem or challenge
2 Alternative Explore alternatives
3 Choose Choose the best alternatives
4 Act Act on the decision
5 Evaluate Evaluate the decision
Managing Resources to Reach Goals
1. Planning
2. Action
3. Evaluation
PlanningThe planning phase of management involves identifying GOALS, OBSTACLES, and RESOURCES
1. What goals do you want to have or achieve?
2. What obstacles stand between you and your goals? What must you overcome?
3. What resources can you use to overcome the obstacles and reach your goals?
ActionThe action phase involves putting your resources to work to overcome the obstacles that stand between you and your goals
1. Determination
2. Flexibility
EvaluationThe evaluation phase is continuous where you assess your progress as you go through all stages of the management process
1. What worked?
2. What did not?
3. How could you make it better next time?
Checkpoint 1.2
Directions: Create a new Google Doc in your class folder labeled as...
“today’s date Checkpoint 1.2”
1. What are some of the unplanned
ways people make decisions?
2. Explain the first step in systemic
decision-making.
3. What does the planning phase of
management include?
4. What two characteristics are key in
reaching your goals?