So Many Decisions, So Little Time
What is one factor that can influence someone when they are deciding what to spend their money on?
Spending personality, Emotions, Past experiences, Culture/Society, Physical health, Financial knowledge
What is the purpose of a budget?
To give every dollar a purpose and to have a plan for your money, allocating money towards specific goals makes it harder for us to take money from it and use it for something else
Which amount is higher? Net pay or gross pay
Gross pay
What are 2 different things you may use a credit card for.
Everyday purchases - gas, groceries, haircut, movie tickets, clothing, concert tickets, etc.
Personal Finance
We make personal, business, and collective decisions based on this term
Scarcity
Groceries, gifts, and clothing are all examples of what type of expense?
Variable expenses
Which should I use to calculate my budget? Gross pay or net pay
Why?
Net pay - This is what you are actually earning after deductions
a) What is interest?
b) If I have a debit card, will I have to pay interest?
a) Additional amount charged on top of what you already owe when you are paying back in installments, the cost of of borrowing money that lenders charge
b) No!
What is an advantage of understanding what type of spending personality you have?
You will be aware of any negative or harmful habits you may have regarding money so that you can take action to make better financial decisions
George has rented a piece of equipment to help him with his backyard deck renovation. The company charges him $15/day for use of the tool. Even though he's been done using the equipment for over a week, he still hasn't brought it back. He says that he'll get to it eventually. What kind of spending personality does George have?
Avoider
Lewis is trying to determine if an item at the mall is a NEED or a WANT. Which question will be most helpful?
- Do any of my friends have this item?
- Will something bad happen if I do not have this item?
- How happy will this item make me?
- Will my teachers be excited if I buy this item, or will they be disappointed?
Will something bad happen if I do not have this item?
How do you calculate gross pay?
Gross Pay = Wage X Hours Worked
You just got your first credit card and you tell your best friend. They reply, "Yuck! I am never going to get a credit card - You just end up in lots of debt!" How would you respond?
If you use your credit card responsibly and pay your balance fully every month, you won't put yourself into debt. Debt happens when you borrow more money than you can pay back and consistently pay the minimum balance or don't pay your credit card bill at all.
The next best thing we give up by making a choice is the...
Opportunity cost
I purchased a pair of shoes from Swift Sneakers a few years ago and the quality was terrible. The laces shredded after a month and the heel of the shoe began separating from the sole. I'm never going to buy shoes from Swift Sneakers again.
What factor influenced my future spending decision?
Past experiences
What role do other people play when we are trying to determine a need versus a want?
Give an example.
Other people make it difficult to determine needs vs. wants because there are so many messages encouraging us to buy!
Examples - salespeople, influencers, celebrities, athletes, social media
Give an example of a deduction someone may see on their paycheck.
Taxes (state/federal), health insurance, dental insurance, retirement savings
Debit and Credit cards are very different, but they share two similarities - What are they?
They are both convenient and act as cash.
Name a pro and a con of borrowing money from family members or friends.
Pro's - Flexible pay back options, Lower interest fates or no interest
Con's - Paying money back may not be a priority, worry of potential judgment from family or friends
Define a Miser spending personality.
A miser saves every single penny, they do not enjoy spending any money
Monthly rent - $100
Health insurance - $30
Dinner with friends - $30
Netflix subscription - $10
Electric bill - $50
Calcuate your fixed expenses.
$140
Riley's net pay is $400, and she has the following deductions: $10- state tax, $10 - federal tax, $20 - health insurance, and $15 retirement savings.
What is her gross pay?
$455
Which statement about credit card interest rates is TRUE?
- The more money you spend on purchases, the higher your interest rate will be
- A high interest rate means you'll pay MORE money total
- A high interest rate means you'll pay LESS money total
- Most credit cards do not charge any interest rate
A high interest rate means you'll pay MORE money total
What is the highest credit score a person can receive?
850