1. The Economy and You

2. Consumer Rights and Responsibilities under the Free Enterprise System
The Right to:
To purchase products and brands that you want and reject the others
To become any profession that you want
Enter into any enterprise that you want

3. Responsibilities:
Find out about the products that we buy to ensure quality
To get the best value for our money
Protect ourselves as consumers and not rely on stores and businesses to do so

4. Protecting Consumer Rights
Throughout history consumer rights have been labeled as caveat emptor, ,Latin for “buyer beware”
Consumerism is a movement to educate consumers about the products that they buy and to demand better and safer products from manufacturers

5. Congress has passed numerous laws to protect the consumer
-many of these laws affect labeling
-Fair Packaging and Label Act
*requires that every package has a label which identifies the weight and contents of the package

6. Private groups and organizations also protect
-many run by business groups rather than by consumers
*businesspeople recognize that the key to success lies in the trust given by the consumer
-Better Business Bureau

7. Group Activity
You will be in groups to work on your budget activities. (This will be broken up into three parts.)
Class Discussion: Why are personal budgets necessary?
Part I: Your group will define the following four terms: fixed expense , variable expense, essential, and non-essential
You will also have to give an example of the term, write a characteristic on the term, and draw an illustration of what you think the term is.
Your group will answer the following questions: What is the difference between fixed and variable? What is the difference between essential and non-essential? Why is it important to decipher between fixed/variable and essential/non-essential?

8. Example
Definition
Example
A sentence about the term
Illustration

9. Consumer Bill of Rights
Designed during the Kennedy and Nixon administrations to strengthen the consumers’ voice
5 major rights of the consumer: Consumers have the right to
A safe product: one that will not harm their health or lives
Be informed: protection against fraudulent, deceitful, or grossly misleading information and to be given facts needed to make informed choices

10. choose: have a variety of products and services at competitive prices
be heard: guarantee that consumer interests will be listened when writing laws
to redress: the ability to obtain adequate payment from the manufacturer if their product causes financial or physical damage

11. Consumer Responsibilities
1. If a product or service is faulty, it is the consumer’s responsibility to begin the problem solving process
Report the problem immediately
Do not try to fix the problem yourself- doing so may void the warranty
State the problem and suggest solutions
The consumer must exhibit ethical behavior
Respect the rights of producers and sellers
Example: returning a used product because you found it cheaper elsewhere

12. Your Role as a Consumer Depends on the amount of available income
Depends on how much of your available income you choose to spend or save
Regardless of the size of income, the consumer must make constant decisions

13. Uses of Income 2 types of money Disposable income
Money made after all taxes has been paid
Also called take home money
The amount that the check is made out for you to cash
Spent on all kinds of goods and services, but generally spent first on the needs (house, food, clothing)

14. Discretionary income
The money that is left over after paying for the necessities
This is the money that is used to buy things that are considered wants (vacations, expensive tennis shoes, sports cars)

15. Group Activity (Part II)
This is Jim; he works 20 hours a week at the local hardware store as a stock boy making $160 per week. Jim’s car note is $200 per month and he pays $65 for car insurance per month. Jim spent $45.00 on gas this month and bought 2 concert tickets last week for himself and his girlfriend at $50.00 each. Jim’s mother paid him $25.00 this month for cutting the lawn. Jim paid two parking tickets in the amount of $35.00 each. Jim also spends $20.00 a week to have his car detailed.

16. You will complete the budgeting exercise to see if Jim is budgeting correctly. And you will also have to answer the following questions:
What is the term when Jim purchases 2 concert tickets?
Does Jim save or lose money for the month?
Why might someone lose money?

17. Purchases Made Can be purchased with Cash Charged to an account
A line that is extended by a particular store to a regular customer
Bill prepared and paid monthly

18. Charged to a credit card
Can be used in any business that accepts credit cards
Issued by banks and some businesses
The business collects the purchase price from the issuer of the credit card and then the issuer sends a monthly bill to the credit card holder for the purchase
Card holder can pay the bill in its entirety or make installment payments
If cardholder is paying in installments, interest will be charged according to the agreement made with the card issuer
Late payments may result in additional passed to the cardholder by the issuer

19. As a Consumer, each person must make a series of choices
Decision making
All steps in decision making involve opportunity costs
What is the next highest choice that you can do with your money if you don’t make this particular purchase?
What are your Goals?
Create a personal budget
Create long-term goals
*Suppose you are saving for a car that costs $ You are working long hours to make the money. If you decide to use some of the money to buy new clothes and go on dates, then it will take longer to purchase the car. Spending some now, will reduce the chances of buying the car, while saving and not using the money for those items will increase the chances of buying the car.

20. Saving for the Future
Setting aside a portion of your income for future use
Part of your income that is not spent
A way to help reach your long-term goals
Can be a difficult habit to establish
-some people think that they should enjoy spending every cent that they make; thus spending their money as quickly as they get it
Reasons for saving
-most people cannot make major purchases (car, house) without putting aside money to help pay for them
-emergencies (the air conditioner at your house breaking, your car breaking down)
-vacations
When individuals save, the economy as a whole benefits
-provides money for others to invest and spend
-allows businesses to expand, which provides increased income for consumers
-raises the standard of living

21. Saving Regularly
An easy way is for employers to withhold a fixed amount for an employees’ paycheck which will be automatically deposited into a participating employees’ savings account
Another way is for consumers to deposit each week or month, a specific amount that they budget for savings
When placing the money into a bank account, the consumer will earn interest on the deposited amount

22. Deciding about Your Savings
Saving involves a trade-off: the more you save today, the more you can buy in the future
Saving increases a person’s future purchasing power
Saving will decrease the amount of money that you have to spend now
Deciding how much to save depends on how you would answer the following questions:
1. How much do you spend on everyday expenses?
2. What are your main reasons for saving?

23. 3. How much interest can you earn from your savings and how fast will the savings grow? 4. How much income do you think that you will be earning in the future? -if you expect to make a much higher income in the future, you will have less of a reason to save a large percentage of your present income -when you are a self supporting adult with more responsibilities, you will be saving for other reasons, such as a retirement and emergencies

24. Group Activity (Part III)
Each group will receive a scenario and will have to decide what type of spenders are they. (Spenders or Savers)
Each of you will receive a worksheet that you will discuss and answer.