Chapter 1 & 6

Chapter 1 Learning Outcomes

Section 1: What is Personal Finance? 

• • Describe what personal finance is 

  • Outline the components of effective financial planning;

  • Identify focuses of study throughout this course 

Section 2: Money, the American Way 

• • Understand the evolution of American’s dependence on credit 

  • Observe and analyze the “normal” American family as it relates to personal finance 

Section 3: You and Money 

• • Develop communication strategies for managing money and discussing financial issues. 

  • Evaluate your own money personality; identify your money strengths and weaknesses

Chapter 6 Learning Outcomes

Section 1: Buyer Beware

• • Identify ways companies compete for your money

  • Be familiar with marketing strategies that encourage people to go into debt or finance large purchases

  • Evaluate how peer pressure can affect spending decisions

  • Summarize factors that influence consumer decisions

Section 2: Buyer's Remorse

• • List five steps you should take before making a major purchase

Section 3: Opportunity Cost

• • Evaluate the role opportunity cost plays in purchasing power

  • Describe the effect of inflation on buying power

Chapter 1 Vocabulary 

Consumer – a person or organization that uses a product or services

Credit – the granting of a loan and the creation of debt; any form of deferred payment

Debt – an obligation of repayment owed by one party (the debtor/borrower) to a second party (the creditor/lender); in most cases this includes repayment of the original loan amount plus interest

Economy – a system by which goods and services are produced and distributed

Financial Literacy – the knowledge and skill-set necessary to be an informed consumer and manage finances effectively

Interest - a fee paid by a borrower to the lender for the use of borrowed money; typically, interest is calculated as a percentage of the principal (original loan amount)

Loan – a debt evidenced by a “note” which specifies the principal amount, interest rate and date of repayment

Personal Finance – all of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc. 

Chapter 6 Vocabulary

Branding - the promotion of a product or service by identifying it with distinct characteristics (usually associated with public perception, quality or effectiveness)

Brand recognition/awareness: refers to the public's ability to recall and recognize a brand by its logo, jingles, packaging, etc. 

Buyer's Remorse: feeling regret or concern after making a large purchase

Caveat Emptor: Latin term for "buyer beware"

Financing: to buy an item with credit; paying over time

Marketing: the process of communicating the value of a product or service to customers

Opportunity cost: refers to the financial opportunity that is given up because you choose to do something else with your money

Significant Purchase: an amount of money you spend, usually $300, that causes some pain to part with