3 Consumer RightsConsumers have rights, or protections, in the free enterprise system.A consumer is someone who buys a good or service.
4 Two Types of Income Consumers have two types of income to spend: Disposable Income: money left after taxes are paidDiscretionary Income: money left after bills are paid and after all necessities have been bought and paid for
5 Protecting Consumer Rights Consumerism: a movement to educate buyers about the purchases they make and to demand better and safer products from manufacturersLaws (ex. Pure Food and Drug Act)Private groups (Better Business Bureau)
6 Consumer Bill of Rights Right to a safe productRight to be informedRight to chooseRight to be heardRight to redress
7 Consumer Responsibilities Consumers have responsibilities as well as rights.
8 Smart Buying Strategies Gather informationUse advertising carefullyDetermine the best valueComparison shopping is a buying strategy to get best buy for the moneyLook at brand name and generic itemsBalance costs and benefits
9 Other Responsibilities Initiate problem-solving process for faulty goods or servicesKeep warranty informationA Warranty is the promise made by a manufacturer or a seller to repair or replace a product within a certain time period if it is faultyRespect rights of producers and sellersReport problems to government when a settlement cannot be reached
10 Making Buying Decisions Buying a product or service costs more than money; it also costs the time it takes to make the purchase and the opportunity cost of not buying something else.
11 Making Buying Decisions Many factors are involved in consumers’ buying decisions.Steps:Decide whether to buy an item or notInvest time obtaining product informationBalance opportunity cost
13 Making a Budget and Sticking To It! A budget is a record of money earned and spent to help you match expenses to income.
14 Basic Budgeting TermsIncome is money received from labor, business, or propertyExpenses is money spent on goods and servicesBalance: leftover moneySurplus: More income than expenses (good)Deficit: More expenses than income (bad)
15 How To Make A Budget List what you spend. Record what you earn. Analyze the data.Try to have surplus.Monitor spending.
16 CreditCredit can be a valuable item in your financial toolbox; however, as with all tools, you have to know how to use it correctly.
17 Credit Credit is money borrowed to pay for a good or service Credit allows consumers to receive a good or service and pay for it later.
18 Recognizing Credit Terms A lender gives money to a borrower.A lender charges interest, expressed as the annual percentage rate (APR).APR is the annual cost of credit expressed as a percentage of the amount borrowedA credit rating evaluates how well the borrower will repay the loan.The borrower may pledge collateral for the loan.Collateral is property or valuable item serving as security for a loan
19 Sources of Credit Usually require down payment Banks, savings and loans, credit unions, finance companies offer creditMost common—credit cardsCan charge high interest rates
20 Benefits of Credit Allows you to get what you want sooner Teaches financial discipline
21 Drawbacks to Credit Spending more than you can afford Bankruptcy is the inability to pay debtsPoor credit rating
22 Your Responsibility As A Borrower Have a plan to make paymentsUse budget skillsUnderstand credit agreement
24 Saving For The FutureTo save is to set aside income for later use.
25 Why Save? Money for large purchases Emergency aid Luxuries Benefits the whole economy
26 Saving Regularly Automatic deposits into savings accounts Budgeting for savingsEarning interest by saving through financial institutionsInterest is the payment people receive when they lend money or allow someone else to use their money
27 Deciding About Your Saving Trade-offs:Less to spend todayMore to spend tomorrow
28 Types of SavingsMany ways exist for people to save portions of their incomes.
29 Savings Accounts Savings accounts Earn low interest on principal Financial institutions loan the money to others
30 Checking Accounts Checking Accounts Money for purchases Must keep careful recordsDebit cards allow paperless money transfer
31 Money Market Accounts Money Market Accounts Allows you to write checks, like a checking accountPays interest like a savings account
32 Certificates of Deposit Type of time depositAgreement to leave money in financial institution for a set amount of time
33 InvestmentsMaking wise investments in a variety of stocks and bonds is an important part of achieving long-term financial goals.Investing in stocks and bonds leads to higher returns than other types of savings.Returns is the profit earned through investing
34 Stocks Shares of stock provide partial ownership in a company A stock is an ownership share of a corporationStock prices may go up or down, based on company performance.Investors may earn dividends.Dividend is the payment of a portion of a company’s earningsHigher possible return, but at greater risk
35 BondsA bond is a contract to repay borrowed money with interest at a specific time in the futureLoans money to company or governmentPays set rate of interest over several yearsU.S. government bonds are a very safe investment.
36 Mutual FundsMutual Funds are pools of money from many people who are invested in a selection of individual stocks and bonds chosen by financial experts.Pools money to invest in different stocks and bondsChosen by financial expertsLess risk than investment in individual stocks
39 What Kind Of Spender Are You? Careful spenders avoid pitfalls, such as impulse buying, on their way to meeting their financial goals.Impulse buying is purchasing an item on the spot because of an emotional rather than planned decisionSetting financial goals can help you spend money wisely.Evaluate your spending to help you meet financial goals.
40 Impulse Buying Beware of impulse buying. Try not to buy too quickly based on emotions.Some impulse-buying is okay. Too much is bad.Follow guidelines to avoid too much impulse buying.
41 Your Goals and Your Buying Decisions The buying decisions you make can have a major impact on your life and career choices.Consider goals when buying items.
42 Now or Later? Long-term goals can conflict with short-term goals. Must balance long and short- term goals.Long-term planning can improve finances down the road (e.g., saving for college will lead to higher income later)
45 Buying StrategyMaking consumer decisions involves deciding the following:whether to spend your moneywhat you will purchasehow to use your purchaseComparison shopping involves making comparisons among brands, sizes, and stores.
46 Consumerism Consumer Rights Include: the right to safety the right to be informedthe right to choosethe right to be heardthe right to redress
47 Budget A budget is an organized plan for spending and saving money. What you do with the information in a budget is up to you. No one can force you to spend less and save more unless you want to.
48 CreditWhen buying on credit, the amount you will owe is equal to the principal plus interest.Financial institutions that provide credit include commercial banks, savings and loan associations, and credit unions.
49 Saving and Investing It is important to get into the habit of saving. Individuals have many places to invest their savings, including savings accounts and certificates of deposit.Shares of stock entitle the buyer to a certain part of the future profits and assets of the corporation that is selling the stock.