Section 1.3
Financial Influencers
Objectives
After studying this section, you will be able to:
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Terms
economic conditions
recession
inflation
demographics
culture
technology
globalization
Your Financial Future
There are many important factors and forces that will influence your
financial life now and in the future. These include economic, social, cultural,
and technological forces. Government actions and advancing globalization
affect personal finances as well. Individually and together, these factors will
cause you to redefine your financial needs, priorities, and goals over time.
Economic Conditions
Economic conditions are the state of the economy at a given time. When
the economy is on the upswing, people are generally optimistic. Businesses
make money, grow, and hire more workers. People who want work can
find good jobs. Their future income is fairly secure, and they can pay their
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when the economy is plagued by problems, such as recession, inflation, or
unemployment, managing personal finances becomes even more important
and challenging.
Recession, a period of slow or no economic growth, can have a major
impact on personal money management. This is especially true for those who
are out of work or whose incomes are stagnant. Recessions spread uncertainty
and pessimism over the entire economy. Consumers spend less and save more
if possible. Businesses cut back and unemployment rises.
Inflation, or a period of rising prices, 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.
FYI
Economics is a science
that examines how
goods and services are
produced, sold, and
used. It focuses on how
people, governments,
and companies make
choices about using
limited resources to
satisfy unlimited wants.
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