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