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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
Decision Making Magic
Following logical steps when making decisions helps individuals make
informed choicesWhen decisions are made from habit or on impulse,
there is a greater likelihood of negative outcomes
© Family Economics & Financial Education – January 2006 – Get Ready to Take Charge of Your Finances – Decision Making Magic – Slide 3
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
2.5.1.G1
Financial Decisions
• Impacts an individual’s or family’s well-beingo Well-being is the state of being happy,
healthy, and prosperous• For example…
o Saving for a family vacationo Spending money wiselyo Purchasing new items
© Family Economics & Financial Education – January 2006 – Get Ready to Take Charge of Your Finances – Decision Making Magic – Slide 4
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
2.5.1.G1 Decision Making
Process• It guides individuals to think through all
components of making a good decision• STEPS:
1. Identify the problem2. Identify resources & gather information3. Identify the options (alternatives)4. Identify the pros & cons of each option5. Put the decision into action - Decide6. Evaluate the outcomes of the decision
© Family Economics & Financial Education – January 2006 – Get Ready to Take Charge of Your Finances – Decision Making Magic – Slide 5
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
2.5.1.G1
Steps
1. Identify the decision to be made
o Know the problem or question before searching for an answer
Which car should I buy?
© Family Economics & Financial Education – January 2006 – Get Ready to Take Charge of Your Finances – Decision Making Magic – Slide 6
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
2.5.1.G1
Steps
2. Identify resources & gather information
Search and compare information related to the decision
$30,000$10,000
© Family Economics & Financial Education – January 2006 – Get Ready to Take Charge of Your Finances – Decision Making Magic – Slide 7
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
2.5.1.G1
Steps
3. Identify the options (alternatives)
• Loans• New vs.
Used• Gas
Mileage
© Family Economics & Financial Education – January 2006 – Get Ready to Take Charge of Your Finances – Decision Making Magic – Slide 8
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
2.5.1.G1
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
© Family Economics & Financial Education – January 2006 – Get Ready to Take Charge of Your Finances – Decision Making Magic – Slide 9
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
2.5.1.G1
Steps Continued
5. Choose the best option
oMake the best choice after thinking about all of the consequences
6. Put the decision into action
7. Evaluate the outcomes of the decisiono This will help you make
better decisions in the future
© Family Economics & Financial Education – January 2006 – Get Ready to Take Charge of Your Finances – Decision Making Magic – Slide 10
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
2.5.1.G1 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
Factors
that affect financial decisions$$
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
Family factors
Family structure
Income level
Lifestyle
Size
Age
Stage of life cycle
Health status
Emergencies
Cultural factors
Cultural - related to the traditions, beliefs, roles, & communication styles of a group
Cultural and ethnic groups impactValues – fundamental beliefs or practices about what is desirable, worthwhile, & important
BeliefsLifestyleFamily structuresClothing choices
Social factors
Education levelFamily structureImmigrationEthnicityRural, urban, suburban
communityPeer pressureCommunity
relationships and involvement
Societal and demographic factorsDemography is the
statistical characteristics of a populationAgeSexRaceBirth, marriage, death
rates
Economic factorsEmployment rateKind and number of jobs available
InflationA period of rapid increase in the price
of goods and servicesRecessionAn extended period of slow economic
growthGovernment Regulations
Fiscal policies affect personal & business spending
TechnologyThe 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 impactsTraining needsReplacing obsolete technologyTypes of jobs available
The MediaMediaCommunications 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.
The Marketplace
SupplyGoods and services available
to the consumer
DemandConsumer desire to purchase
as compared to availability
Market responseHow quickly the market
adjusts to supply versus demand
Legal and moral factors
Laws that impact spendingTaxation 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
Personal factorsNeeds Items to survive – food, clothing, &
shelterWants Not essential but desirable – cell phone,
Music CDs, Values A person’s belief about what is important
and desirableStandards 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