Copyright Goodheart-Willcox Co., Inc. Section 1.3 Financial Influencers 23 Inflation is a period of rising prices. It also relates to personal money management. As prices go up, the value of a dollar goes down. If income does not rise at the same rate that prices rise, buying power is reduced. Consumers cannot buy or save as much. Sound financial planning and saving can help you cope with challenging economic conditions. Interest is the amount that is paid for using money. When money is deposited into a bank, the bank pays the depositor interest. The bank then takes that money and loans it to other consumers. Those who borrow that money pay the bank interest for using that money. If interest rates are high for borrowing money, consumers borrow less, which means they spend less. Demographics To some extent, the way you manage your money and your life in the years ahead will depend on demographics. Demographics are the statistical characteristics of a population. Vital statistics include records of births, deaths, and marriages. Social statistics include population breakdowns by age, sex, and race with geographic distributions and growth rates. Other socioeconomic statistics include education levels, income levels, employment, religion, crime, immigration, and ethnic representation. Consider some of the following trends and their economic implications. • Couples are marrying and having children later in life. • The percentage of single-parent families is growing. • The average age of the overall population is increasing. • Educational requirements for jobs are rising, and job markets are changing. Exploring Careers Personal Financial Advisor Personal financial advisors give financial advice to help clients plan for short- and long-term goals, such as saving for college and retirement. They recommend savings and investments choices to match their clients’ goals. Personal financial advisors typically: • discuss financial goals and money needs with clients • answer questions about savings and investment options and potential risks • recommend investment options to clients • help clients plan for their financial futures • monitor clients’ accounts and determine if changes are needed • research investment opportunities Personal financial advisors often work at brokerage firms, banks, or insurance companies. They typically work full time and may meet with clients in the evenings or on weekends. The work is fast-paced and requires the advisor to stay current on financial products and tax laws. A bachelor degree in finance or a related area is usually required, and a master degree and certification will increase chances for advancement. Advisors must be excellent communicators. Math and computer skills are essential, while attention to detail and initiative are also important traits.