PF MODULE 1.docx

**MODULE 1** **Introduction to Personal Financial Management** At the end of the end of this module, students should be able to: **Changing Needs Over the Life Cycle --** Your household will go through several phases over your life cycle, and your financial situation will change as well. As you g...

**MODULE 1** **Introduction to Personal Financial Management** At the end of the end of this module, students should be able to: **Changing Needs Over the Life Cycle --** Your household will go through several phases over your life cycle, and your financial situation will change as well. As you grow old, you want your family to build and increase wealth, have a retirement income and sufficient wealth for their heirs. **Values and Attitudes** **Cost and Benefit --** the concept of costs and benefits encompass a large area of economics that has to do with rational expectations and rational choices. In any situations, people are likely to make the choice that has the most benefit to them, with the least to make the choice that has the most benefit to them, with the least cost, or, put another way, the choice that provides more in benefits that it costs. **Everything is in the Incentives --** incentives are part of costs and benefits and rational expectations, but they are so important that they are worth further examination. Incentives make the world go round, and sometimes go wrong. If you are a parent, a boss, a teacher, or anyone with the responsibility of oversight, and things are going horribly awry, the chances are very good that your incentives are out of alignment with what you want to achieve. **A. Inflation** is the change in general price (of goods and services) levels over time. It also refers to an increase in prices. **A. Base your decisions on reasonable assumptions, Life is unpredictable,** but even if you don't know the outcome for certain, you can still use the information available to you to come up with a reasonable assumption. Just by answering these few questions you can make your assumptions turn into a reasonable decision that can make better changes in your life. **C. Consider Opportunity Costs --** A measure of what you have to give up order to take a particular action. It's the cost of an alternative that must be foregone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.