Resources and Choices PF Lesson 1

Match the following

• assets

• money or other of value that are used to aquire goods and sevices

• opportunity cost

• the value of the next best option

• net worth

• The difference between your assets and liabilities

• wants

• money and items of value that you own

• financial resources

• things people desire for reasons beyond survival and basic comfort

Explain the steps to making good financial choices. (Make sure to give some detail on each step.)

Answer explanation

First you have to define a problem or goal that you want to solve or accomplish financially. Next you need to gather information such as prices, loan information, choices of products or choices. Then, you compare your choices and look for the best deal/choice. After comparing choices, you will need to make the decision that is best for you. Once you have made a decision, you must put your plan/choice into action. Fianally, you need to re-evaluate you choice after some time to ensure that you have solved your problem or accomplished your goal.

Why is it important to compare options before buying?

Answer explanation

It is important to consider the advantages and disadvantages of each option as well as the opportunity costs to ensure you make the best decision.

Explain how wants are different from needs.

Answer explanation

Wants refer to things beyond our basic needs that add to quality of life, whille needs are things needed for comfort and survival.

Besides the dollar cost, what other costs should you consider when comparing alternative solutions to a problem or goal.

Answer explanation

Other costs to consider is your opportunity costs.

List som strategies you can use to make good financial decisions.

Financial resources include checking and savings accounts, investments, and other items that can be used to cover your needs and wants. How can you add to and grow your financial resources? Why is it important to plan to do this during your lifetime?

Answer explanation

You can grow financial resources by consistently spending less than your income and saving and or investing the difference. You need to grow financial resources to meet long-term goals and needs in the future.

Some assets appreciate, or increase in value over time, and some assets depreciate, or decrease in valued over time. Why do some assets increase while other decrease? Which is a better investment?

Answer explanation

Assets that are permanent or that pay interest and dividents, such as real estate and many typpes of investments, appreciate. Assets that are used up over time or that can quickly become outdated, such as cars and electronics, will depreciate. Assets that will appreciate are generally considered the better investment.

What are the things needed for survival such as food, water, clothing, shelter and medical care?

• Trade-offs

• Wants

• Needs

• Financial resources

The act of giving up one option in exchange for another is:

• a cash inflow

• a cash outflow

• a trade-off

• an asset