Why are consumer skills vital to participating in the economy?

1. Problem-Define the problem 2. Alternatives-List alternative solutions and the costs and benefits of each 3. Criteria-Develop a list of criteria that will be needed solve the problem 4. Evaluate-Evaluate each alternative based on the criteria 5. Decide-Choose the best solution based on your evaluation of each alternative

Ask yourself the following: 1. Why do I want this product? 2. How long will this product last? 3. What substitutes are available and at what cost? 4. By postponing this purchase, is it likely that I will choose to not buy it later? 5. What types of additional costs are involved, such as supplies, maintenance, insurance, and financial risks? 6. What is opportunity cost of this purchase? 7. What is the total cost of this product(including interest, etc)?

 Personal Resources Time, money, energy, skills and abilities, credit  Position in life Age, marital status, gender, employment status  Customs, background, religion  Values and goals  Outside factors The economy, technological advances, the environment, social pressures

 Advertising  Goal is to create a desire to purchase a product or service  Pricing  Psychological pricing  Odd number pricing portrays a bargain image  multiple pricing-makes it more likely that you will purchase more  Sales  Loss leader-item priced at or below cost to pull you into the store hoping you will buy other products  Promotional techniques  Displays, contests and games, coupons, frequent buyer cards, packaging sampling, and micromarketing

RentingBuying  Advantages  Mobility  Convenience  Minimal responsibility  Social life  Lower living expenses  Disadvantages  Noise  Lack of privacy  Small quarters  Lack of storage  Lack of parking  Advantages  Equity increases  Tax savings  Control over you property  Pets  More personal freedom  Disadvantages  Increased costs  Down payment  Lack of mobility  Long term investment

 Down Payment  5-20% of the purchase price  Mortgage costs  Points-1 point equals 1 percent on the loan amount, paid at the time of closing  Closing Costs  Usually $3,000-$5,000  Include: title search and title insurance, loan fees, credit report fees, paperwork preparation fees, recording fees, some portion of taxes and insurance  Installation fees  Costs to turn on electricity, phone, etc.

 Identify your needs and wants  Determine what you can afford  Identify and research your choices  Decide whether to buy new or used  Get credit pre-approval  Research insurance rates  Search for available vehicles  Test drive each vehicle  Check the history on a used vehicle  Get the vehicle checked mechanically  Determine a fair price  Negotiate the price  Determine if you want dealer add-ons

 Gas and oil  Change your oil every 3,000 miles or 3 months(whichever comes first)  Depreciation  Decline in value of property due to normal wear and tear  Registration and title  Registration and sales tax at purchase  License fee and emissions testing every two years  Maintenance and Repairs  Tune-ups, brakes, etc.  Accessories

 Risk in insurance is the chance of financial loss from the perils to people or property  Insurance= method of spreading individual risk among a large group of people to make losses more affordable for all  Policy-a written contract  Fee for insurance is a premium  Policy holder is the owner of the insurance policy  Insurer is the insurance company  Indemnification means to put the policyholder back into the same financial position they were in prior to the incident, not to better it

 Personal risks-the chances of loss involving your income and standard of living  Property risks-the chances of loss or harm to personal or real property  Liability risks-the chances of loss that may occur when our errors or inappropriate actions result in bodily injury to someone else.

 Personal risks-the chances of loss involving your income and standard of living  Death  Injury - cannot work  Medical condition  Disabled

 Property risks-the chances of loss or harm to personal or real property  Fire  Theft

 Liability risks-the chances of loss that may occur when our errors or inappropriate actions result in bodily injury to someone else.  Negligence or inappropriate action resulted in:  Property damage  Personal injury Liability= responsibility for loss due to your own actions and negligence.