Consumer Spending Consumer choices: Making good economic decisions There are so many goods and services available: Limited incomes forces people to make choices. Making good decisions can be frustrating and confusing.

Steps to making good economic decisions: Step 1: Set Goals –Make a list of your priorities – things that come first in order of importance. –What is more important to you, buying a car or getting your own apartment?

List five priorities that you have for your life: __________________________________ ___________________________________

Setting goals cont.. Making a budget – A breakdown of how you spend your money. –Take your monthly income and subtract what you spend on necessities (housing, food, utilities..) –The amount that you have left is your budget for spending on goods and services.

Example of a budget Total monthly income after taxes: $1400 –Expenses: Rent: Utilities : Food : Transportation : –Total = _________ Money for goods and services: _____________

Budget Assignment Pick a career and figure out your monthly income. Come up with a budget that lists all necessities. List goods and services you will buy with the money left after bills. List some opportunity costs for your choices. On hand-out

Step two: Gather Information Deciding what to spend your money on: Gather information about products and services. Comparison Shop – looking at the similarities and differences in quality, features and prices of things that you are thinking about buying.

Things to consider: 1. Does the product have a warranty? –Full warranty – A promise to repair or replace any part of a product for a certain period of time. –Limited warranty – A promise to repair or replace only certain parts of a good.

Warranty cont.. List some products that have warranties: (What type of warranty, full or limited?) _______________________________ List some products that do not have warranties: __________________________

More things to consider: 2. Does the product have a brand name, or is it generic? –Generic products – without a brand name –List some name brand products: ______________________________________ ______________________________________ –List some generic products: ______________________________________ ______________________________________

Differences between generic and name brand Which are cheaper? ___________________________________ Is it always better to buy generic? ___________________________________ What is the differences in packaging? ___________________________________

Where are you shopping? Small boutiques: Prices are usually higher Department stores: Prices can be high, some sales Factory outlets: Usually cheaper prices / high quantities? Where do you shop around your town? ________________________________________ ________________________________________ How are the prices?___________________________________ ________________________________________

What additional costs will there be? Example : A new car ___________________________________ ___________________________________

Step Three: Think about trade- offs What will you be giving up or trading to buy something? This sounds like ____________________ ____________________. On a separate piece of paper do: Pg Pg

Consumer protection Rights of consumers: –The right to choose among various products or services –The right to safety in consumer products –The right to by fully informed about the type of good or service. –The right to be heard – have a say about laws affecting them.

Private agencies for consumers 1. Better Business Bureau – helps protect consumers from unfair business practices. 2. Chamber of Commerce – A group of representatives of local businesses who meet regularly to promote business in their town.

Government Agencies Investigate fraud – deceit or trickery Prosecute offenders. Bait and Switch – an illegal form of advertising. Bait to get you in the store : “Cheap price”. When you go to buy, they talk you into a more expensive item (switch) –Promising good looks, health or happiness if their product is used.

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Bait and Switch assignment Go through magazine ads and look for “bait and switch” ads. Look for ads that promise happiness, health or good looks. Cut out 3 ads and be prepared to present them.