Copyright Goodheart-Willcox Co., Inc. 9 Section 1.1 Introduction to Financial Literacy Financial planning requires the application of ethics and personal responsibility. You have an ethical obligation to plan for your financial future to the best of your ability. Ethical financial planning requires you to earn money for doing honest work. It also requires you to use the money in a way that sustains your life. For example, it would be unethical to incur unnecessary credit card debt without the intention of repaying it. When planning for your future, you should not assume someone else will provide for your health and well-being for the rest of your life. To purposefully avoid work and depend on someone else, or the government, to provide you with food and shelter could be considered unethical. Priorities A priority is a value or goal that is given more importance than other values and goals. Priorities are set by ranking goals in their order of importance. Identify the things that are important to you and rank each item from most to least important. This helps direct time, energy, and money to whatever you most want to achieve. Whenever you decide one thing is more important than another, you are making a priority judgment. If you think it is important to enjoy your work, you may choose a job you like rather than a higher-paying job that does not appeal to you. Some priorities are related to money and financial matters. These can have a major impact on the choices you make as a consumer and in your financial life. Standards A standard is an established measure of quality, value, or quantity. The word “standard” is used in many ways. Electrical products must meet certain safety standards before they receive a seal of approval. Doctors and lawyers must meet certain professional standards before they can practice. Case Study Making Decisions Maurice wants the lead in the school play. The problem is that rehearsal will be held for two hours every weekday afternoon for the next three months. If he gets the lead, he must quit his after-school job at the mall. If he quits now, the manager probably would not hire him for full-time summer work. Maurice needs the income to save for his college tuition. Since he is a senior, this is Maurice’s last chance to be in a high school production. The best actors in the spring play are sometimes chosen for Summer Theater. This often leads to a career in drama, which Maurice has always wanted. Case Review 1. What is the trade-off if Maurice decides to keep his job? 2. What is the opportunity cost if he decides in favor of the play? 3. What other alternatives might Maurice have? 4. How would you resolve Maurice’s goal conflict if this were your decision?
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