Financial Fitness for Life

Training Workshop
Consumer Decision Making

University of Illinois at Urbana-Champaign College of Agricultural, Consumer and Environmental Sciences

United States Department of Agriculture Local Extension Councils Cooperating
University of Illinois Extension provides equal opportunities in programs and employment.
 Funding for this workshop
is provided by:

National Council on Economic Education

US Dept of Education
University of Illinois Extension
Instructors

 Dr. Angela Lyons, Assistant Professor,

University of Illinois Urbana-Champaign

 Patricia Hildebrand, Extension Educator,

Effingham Extension Center
Objectives
 Introduce:
(1) Financial Fitness for Life
(2) Consumer Decision Making
(3) Earning Income and Taxation
(4) A Job for Me
(5) Risk and Insurance

 Experience activities to use in the classroom

 Answer questions about curriculum and other
resources
You will receive…
 Curricula with lessons and activities to use in
the classroom

 6 CPDU’s

 Network of colleagues to share experiences

 Resources available at U of I Extension

Financial Fitness for Life

Overview:

 Teacher Guide
 Student Workouts
 Parents’ Guide
 CD-Rom and web links
http://fffl.ncee.net
5 Themes and 22 Lessons:

 The Economic Way of Thinking

 Earning Income
 Saving
 Spending and Using Credit
 Money Management
Each lesson includes:

 Fitness Focus (lesson description and objectives)

 Workout (warm-up, exercise, cool down)
 Visuals
 Student Exercises
 Family Activities
Meets national and most state content
standards in 4 critical areas:

 Economics
 Language Arts

 Mathematics

 Personal Finance
Topic 1: Consumer Decision Making

Grades 6-8:
Lessons 1, 2, and 14

Grades 9-12:
Lessons 3 and 12
Key Concepts
 Opportunity Cost
 Trade-Offs
 Alternatives
 Criteria
 Cost/Benefit Analysis
 Incentives
5-Step Decision-Making Process

Step 1: Define the Problem.

Step 2: List your Alternatives.

Step 3: Identify your Criteria.

Step 4: Evaluate your alternatives

based upon the criteria.
Step 5: Make a Decision.
An Example
Problem:
I don’t have enough time to finish 2 big assignments.
Alternatives:
I can do my math homework or finish my science project.
Criteria:
I have an A average in math and a C average in science. The math
assignment is worth 10% of my math grade; the science project is
worth 25% of my science grade. I’ve missed two assignments in math;
I haven’t missed any assignments in science.
Evaluate:
Because I’m not doing so well in science, and the science project is
worth more, it’s more important for me to finish the science project
(even though I have a missing math assignment).
Decision:
I’ll finish the science project.
An Activity

Which Cookie is Best?

Criteria

Alternatives

A
B
C
Directions
 Divide students into groups. Distribute 3 types of
chocolate chip cookies to each group. Use A, B, and C
in the first column to identify the 3 alternatives
(different brands of cookies).

 Have students list the criteria they will use to judge the
cookies across the top row (i.e., taste, color, aroma,
crunchiness)

 Have the students taste the

3 different brands of cookies.
 Each group then evaluates the alternatives using the
criteria and the following scoring:
1 = lowest (or worst)
2 = middle
3 = highest (or best)

 Each group makes a decision about their cookie

preference and reasons for their preference.

 At the end, reveal the brand names, the costs per box,
and the cost per unit. Does this information affect their
decisions? What are the opportunity costs of selecting
their alternative?
What happens when some criteria are more
valuable than others?

ACTIVITIES:
 Students use the decision-making grid to make a
decision about buying a personal computer. Students
visit stores or use the Internet. They can work in
groups or individually (i.e., Exercise 2.3, 6-8, p. 21-23;
Exercise 3.3, 9-12, p. 16).

 Students select a college using the decision-making

grid (i.e., Exercise 3.2, 9-12, p. 13-15).
Why do individuals, with the same
information, make different decisions?

AN ACTIVITY:
Panel Discussion
Assessment 2.1, 6-8, p. 24-25
Choosing the Better Incentive

AN ACTIVITY:
How do you know a
“good” deal when you see it?

(Exercise 1.2, p. 7, 6-8)

Do your homework!!!
 Shop around! Visit stores, read the
newspaper, surf the Internet.

 Know that you may not be fully

informed.

 Be aware of sales tactics:

 Hidden costs
 “Bait and switch”
 Deceptive pricing -
“special value” items
 Deceptive advertising

 ACTIVITY: Evaluate credit card offers

 How do you find a
reputable business?
Better Business Bureau (BBB)
www.bbb.org
Federal Trade Commission (FTC)
www.ftc.gov
National Consumers League (NCL)
www.nclnet.org
National Fraud Information Center
sponsored by the
National Consumers League
www.fraud.org
What’s Going on in Illinois?

Office of the Illinois Attorney General

www.illinoisattorneygeneral.gov/consumers/index.html

Consumer Fraud Hotlines

Chicago Springfield Carbondale
800/386-5438 800/243-0618 800/243-0607
TTY: 800/964-3013 TTY: 877/844-5461 TTY: 877/675-9339

Spanish Language Hotline

1-866-310-8398
Topic 2: Earning Income, Taxation, and Jobs

Grades 6-8:
Lessons 3, 5, and 17

Grades 9-12:
Lessons 4, 6, and 7
Why do some jobs pay more than others?

 Market varies for different occupations

(laws of supply and demand)
 People with more natural ability in their
occupations tend to earn more.
 People who work hard tend to earn more.
 People who get along with others and are self-
disciplined also tend to make more.
 Another important factor is investment in
HUMAN CAPITAL!
What is Human Capital?
 Human capital includes the intellect (natural
ability), knowledge (education), experience (skills
and training), and attitude (willingness to learn)
necessary for success.

 People invest in their human capital primarily

through education and training.

 AN ACTIVITY:
The Human Capital Game
Why Stay in School?

Importance of lifetime earnings!!!

(See Exercise 5.2)

Sources for Education, Income,

and Employment Statistics
 U.S. Census Bureau (www.census.gov)
 U.S. Bureau of Labor Statistics (www.bls.gov)
Uncle Sam Takes a Bite!
(9-12: Exercise 7.1 - 7.3; 6-8: Exercise 17.1)

Key terms:
 Gross pay
 Net pay
 Deductions
 Federal, state, local income tax
 FICA (Federal Insurance Contribution Act)
 Benefits
An Example

 Studen

The Mint
Where Your Paycheck Goes

http://www.themint.org/spending/whereyourpaycheckgoes.php
Job Application Process
 Occupational Self-Assessment
 Looking for Job Openings
 Letter of Application (cover letters)
 Resume
 Application
 The Interview
America’s Job Bank
www.ajb.dni.us
 Monster Jobs
www.monster.com
 CareerBuilder.com
www.careerbuilder.com
 Chicago Tribune
Job Listings
www.chicagotribune.com/classified/jobs
 A JOB FOR ME!
(a curriculum for young adults
entering the workforce)
 Jobs! Jobs! Jobs!
(an interview simulation game)
Topic 3: Risk and Insurance

Grades 9-12:
Lesson 22
All Choices Involve Risk!

Two basic ways to

reduce risk:
 Change your behavior
or your possessions.
 Purchase insurance.
How Does Insurance Work?

The purpose of insurance is to spread risk

over many payers. A pool of people
contribute money to buy insurance from an
insurance company, with the expectation
that only a few will actually experience a loss
that will need to be covered.

(See example p. 139.)

Key Concepts

 What is a premium? Deductible?

A premium is the fee paid for insurance
protection. A deductible is the amount
of loss paid by the insured.

 What types of insurance are commonly available?

Auto, health, renter’s, homeowners, life, disability (see
Table 22.1, p. 140)

 Is the cost of buying insurance worth the benefit?

The general guideline it to not let a large portion of
potential loss remain uninsured.
An Activity: The Big Risk (p. 142-143)
The Scenario:
 You have just graduated from high school or college,
and you are single.
 You own a number of assets you are thinking about
insuring: automobile, inherited jewelry, a rare coin set,
contents of your rented apartment.
 Your employer provides a health insurance plan you
can purchase.
 You have $2,600/year to spend on
insurance; you can spend less.
The Simulation:

 Divide the class into small groups. Select one student in each group who
will NOT purchase any type of insurance.

 The rest of the group has budgeted $2,600/year to purchase insurance.

Students purchase insurance. They will not be able to insure all items.

 Each group receives a deck of cards (ace through queen where ace = 1,
2=2, jack=11, queen=12). The number represents the item(s) affected
by an unexpected event

 Each group pulls a card 5 times from the deck. Shuffle the cards before
choosing one for each year. The simulation represents 5 years.

 Students calculate the total amount spent for the 5-year period and
compare it to the total amount spent for those who did not purchase any
type of insurance.
Helpful Resources

University of Illinois Extension

Consumer and Family Economics
www.ace.uiuc.edu/cfe

National Council on Economic Education

www.ncee.net

Illinois Council on Economic Education

www.econed-il.org
 University of Illinois Extension
Consumer and Family Economics
www.ace.uiuc.edu/cfe
NCEE
www.ncee.net
Questions