1 / 13

5.1 Personal Finance

5.1 Personal Finance. Economics. Economics is the study of how we make decisions when resources are limited. You must decide between what you NEED and what you WANT . Wants/Needs . Needs are things we need for survival, such as food, clothing, and shelter.

adonai
Download Presentation

5.1 Personal Finance

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. 5.1Personal Finance

  2. Economics • Economics is the study of how we make decisions when resources are limited. • You must decide between what you NEED and what you WANT.

  3. Wants/Needs • Needsare things we need for survival, such as food, clothing, and shelter. • Wantsare things we would like to have.

  4. Scarcity • The fundamental problem is scarcity. • When things are scarce, we do not have enough resources to produce all the things that we would like to have. • Because of scarcity, we must make choices among alternatives.

  5. Financial planning • Needs generally rank higher than wants. • Eating is more important than buying the most expensive clothing. • You must plan a budget in order to have economic security. • A budget is a personal spending plan.

  6. Instant gratification • Economic choices should always be based on long-term benefits and costs. • When people consider only short-term satisfaction, they choose based on immediate gratification. • Future costs may outweigh present benefits, such as when one uses credit cards irresponsibly. • The cost of the future debt outweighs the satisfaction of the present purchase.

  7. Be Responsible with Credit Cards

  8. Delayed gratification • Delayed gratificationdescribes a person's ability to wait to obtain something that he or she wants. • This is also called is also called impulse control, willpower, and self control. • Many choose to buy on “Layaway”.

  9. Personal spending record • A personal spending record keeps track of the money a person or household spends. • In order for this record to be accurate, you must know your exact income and be precise with actual spending. • Saving receipts or paying with a debit card helps to keep track. • Don’t spend more money than you have.

  10. Cash flow • Cash flow is cash that comes into or goes out of a person's account. • Cash flow can come from any number of sources and is crucial for a person's continued survival. • Cash inflow may come from wages, salary, sales, loans, or even personal gifts. • Cash outflow usually comes from expenses and investments. • It is crucially important to maintain a positive net cash flow as much as possible.

  11. Opportunity cost • Every economic choice has alternatives. • Opportunity costs are those things that economic choices make us give up, as a nation or individuals. • One a choice is made, something is sacrificed.

More Related