49da0af1c36cef8eb6348f2bf2e5688d.ppt
- Количество слайдов: 19
Chapter 20 Objectives: 7. 02, 7. 03, 8. 07, 8. 08,
Managing Your Money • Consumer: someone who buys a product or service – Have rights and responsibilities • 2 types of income: – Disposable Income: money that remains after all taxes on it have been paid – Discretionary Income: the money remaining after paying for necessities.
Managing Your Money • Caveat Emptor – “let the buyer beware” • Consumerism: movement to educate buyers about purchases and to demand better/safer products from manufacturers – Congress has passed laws like Fair Packaging and Labeling Act – Better Business Bureau- private group that seeks to protect individual consumers
Managing Your Money • 5 Consumer Rights (1960’s) – Right to a safe product – Right to be informed (labels, ads, etc. ) – Right to choose – Right to be heard – Right to redress (obtain payment from manufacturer if a product causes physical/financial damage)
Managing Your Money • Consumer Responsibilities: – Gathering info/ recognizing quality – Use advertising carefully (to learn about products and the best place to buy them) – Deciding where to buy a product • Comparison Shopping: comparing types/prices of products at different stores – Balancing cost of buying used items, items by mail, or other alternative method – Filing complaints/Reporting Problems • Warranty: the promise of a manufacturer or a seller to repair or replace a faulty product within a certain time period
Planning/Budgeting • Personal budget: – A careful record of all the money you earn and spend – Includes • Income: money you earn • Expenses: the money you spend (or save) • Balance: amount of money left over after expenses are subtracted – Surplus- more income than expenses – Deficit- more expenses than income (negative balance)
Planning/Budgeting • Credit: borrowed money to pay for a good or a service • Credit terms: – Lender: person who loans money – Borrower: receives borrowed money – Interest: the cost for use of the money – Annual percentage rate (APR): annual cost of credit expressed as a percentage of amount borrowed.
Planning/Budgeting – Credit rating: an evaluation of the likelihood that a borrower will be unable to pay back a loan (default) • Based on job, previous credit experiences, financial situation, etc. – Collateral: property (i. e. a house or a car) that a borrower pledges as security for a loan. • If the borrower can’t repay the loan, the lender can seize the collateral.
Planning/Budgeting • Sources of Credit: – Banks – Credit Unions – Finance Companies – Retail stores • Credit Cards – Allows consumer to charge for goods/services (up to a preset monthly limit) – Fees for late payments, interest charges, etc.
Planning/Budgeting • Anyone over 18 can get a credit card • Benefit: – Not having to wait to save the full value – Making monthly payments can teach discipline • Drawbacks: – Many people buy more on credit than they can afford – Bankruptcy: the inability to pay debts • Remains on credit rating for 7 -10 years
Saving • Should be looked at as a regular expenditure. • Reasons for saving: – To put towards an expensive item – For emergencies – For luxuries (like vacations) • Saving is good for economy: – Money available for others to invest/spend – Money businesses can borrow
Saving • Saving money involves a trade-off – More money for tomorrow, or less for today • Questions to ask before saving: – How much do you spend on a daily basis? – How fast will your savings grow? – How much income do you expect in the future?
Types of Savings • Savings Accounts: – Can be opened at banks or credit unions – Pay a fairly low interest rate – Interest is added to the principal: • Initial amount deposited – Funds are readily available (can withdraw them) – Often require a minimum balance
Types of Savings • Checking Accounts: – No interest – Designed for constant transfer of money • Paying bills, writing checks, etc. – Sometimes requires a minimum balance – Debit cards – Don’t spend more than you have, or you could • “bounce” a check • overdraft
Types of Savings • Money Market Account: – Savings account with a high minimum balance – Can withdraw money any time, or write checks – Has a higher interest rate than savings account • Certificate of Deposit – Deposit money for a certain amount of time (6 months -5 years) – Guaranteed interest rate, higher than savings – Cannot withdraw until the time period is up • Withdrawing early results in a financial ‘penalty’
Investments • Stocks – Ownership share of a company – Value fluctuates with success of the business – Some companies pay dividends: • payment to shareholders of a portion of companies earnings at regular intervals – Higher return (profit), but higher risk
Investments • Bonds – Lending money to a company or gov’t – Risk with company bonds – Gov’t bonds are considered safest investment • Pay half of the face value; after a certain time period it matures to face value
Investments • Mutual Funds – Pools of money from many people – Money invested in expert’s choices of stocks and bonds – Less risky because money is spread out over different stocks – Popular mutual funds (and stocks) are tracked by a gov’t regulated index • Like the Dow Jones Industrial Average
Achieving Financial Goals • Constantly review your spending habits • Avoid impulse buying: – Buying based on feeling without considering the consequences – Signaled by excessive buying, constantly borrowing money, quickly lose interest in things you have bought, etc. • Choosing between long-term and short term goals (spending now or later)
49da0af1c36cef8eb6348f2bf2e5688d.ppt