Self Awareness & Decision Making PDF

to Personal Finance Mrs. Stanton Date Class Connect? Content For Class Assignments Due Date Mon 9/4 No School – Happy Labor Day Tues 9/5 2:15-2:55 REQUIRED Class Connect 2. Self Awareness & Decision Making • Make sure you have completed: • Bucket List Quiz • PreTest Wed 9/6 2:15-2:55...

to Personal Finance Mrs. Stanton Date Class Connect? Content For Class Assignments Due Date Mon 9/4 No School – Happy Labor Day Tues 9/5 2:15-2:55 REQUIRED Class Connect 2. Self Awareness & Decision Making • Make sure you have completed: • Bucket List Quiz • PreTest Wed 9/6 2:15-2:55 REQUIRED Class Connect 2. Self Awareness & Decision Making • Self Awareness & Decision Making Quiz due Friday 9/8 9/8 Thurs 9/7 No Class Connect 2. Self Awareness & Decision Making • Self Awareness & Decision Making Quiz due Friday 9/8 9/8 Fri 9/8 No Class Connect Back to School Picnic Day!! • Self Awareness & Decision Making Quiz due by 11:59pm https://youtu.be/Ltk1hM6iu44?si=4H 9llezl8C5zsdi4 Self Awareness & Decision Making Quiz due by 11:59pm Previous Assignments: Bucket List Quiz - 10 points PreTest – 15 completion points Questions to get you thinking: 1. What emotional reactions do you have when thinking or talking about money? 2. So far, who specifically have you learned the most from about managing money? 3. What is the first thing you do when you earn or receive money? What Do You Value? ● People decide on how to use their money based on their personal values, or what they judge to be important in their lives. ● What you will want in your financial future and what you need to feel financially secure depends on your values. ● Four categories of values that drive financial behaviors: ○ ○ ○ ○ inner values social values physical values financial values Inner Values – our personal identity (how we see ourselves) and our social identity (how we believe others see us) • Areas of Influence • Sense of purpose and meaning in life • Desire to worship (or not) • Need for safety and security • Desire for freedom and independence • Control over goals and priorities • Need for personal space • Preference for working alone or with others • Outer success vs. inner contentment • Effect on Money Habits • Strong inner values translate to trusting one’s gut or following the inner voice, which can give the person the • resourcefulness to overcome a sudden money crunch. Strong feelings of autonomy and security help us feel in charge of our lives, which can translate to more confidence in financial transactions. Social Values – Our desire for belonging and relatedness with our family members, neighbors, friends, coworkers and communities Includes organizations with which we identify (e.g., clubs, sports teams, schools, professional groups) • • Areas of Influence • Desire to be alone or with others • Providing for others in formal and informal ways • Charitable giving and public service work • Budgeting jointly and sharing expenses • Feeling of relatedness to political parties and representatives • Social justice and civil rights Effect on Money Habits • How we handle money is, in part, tied up in our unique family histories. • Habits and cultural preferences we learn early from our families and other social relationships influence later money • habits. Sometimes we unconsciously “act out” in our adult money habits in response to messages received in childhood. Physical Values - The tangible aspects of life, the external world, our physical health and well-being • • Areas of Influence • Amount of space we need to feel comfortable • Degree to which we are satisfied and fulfilled by beauty and material possessions • Health of our bodies and the measures we are willing to take to secure that health • Desire for pleasure and comfort • Appreciation of art, fashion, architecture and design Effect on Money Habits • Strong physical values might translate to overspending on material possessions if left unchecked, but physical values • also show up in our desire for quality. This person is willing to spend more for craftsmanship and design. A person with strong physical values also might prioritize getting more insurance to protect their valuables, and might spend more than others on home and self-care (e.g., gym memberships, beauty treatments, dry cleaning, interior design). This is not felt to be frivolous, but to protect his or her investment. Financial Values - Unrelated to how much money we actually have, these values reflect what we think or believe about money • • Areas of Influence • Sufficiency of money (do I have enough?) • Sustainability of resources (how long will my money last?) • Appropriateness of financial decisions (is this the right choice for me?) • Bargain hunting and getting a good deal • Saving for long-term security and short-term goals Effect on Money Habits • Those with strong financial values likely think more about the sustainability of their money and generally have more in • • reserve. When one does not have a strong concern about the appropriateness of their purchases, he or she might be less prepared for financial emergencies. People with strong financial values can be great financial educators, both professionally and personally. Self Awareness – how clearly we see our own values, passions, aspirations, fit with out environment, reactions and impact on others Examining your values lets you clearly understand what matters most to you and why you set the goals that you do. The judgments you make begin to reveal patterns in your behavior that are specific to you and your values. And, the hard choices you have to make become easier when you remain true to your values and goals. INTERACTIVE QUIZ Here is a link to an online quiz called “What Are Your Values in Money Management?”. This quiz will give you some insight into why and how you make money decisions the way you do now. It is also in your content. Results: (use polling) A. B. C. D. Inner Value Social Value Physical Value Financial Value Motivation ● A motive is a reason for doing something ● Your motivation is the strength of your motive You can be motivated by things that you need or want. These motives can influence what you spend your money on. ● Consumer motives are the reasons why people make specific choices in spending their money. 2 Main Types of Consumer Motives ● Rational or Functional – a logical, practical motive for purchasing a product. A rational or Functional motive is often a result of a need for a specific product, instead of a want. EXAMPLE Buying food to feed your family, a lawn mower to care for your lawn, or a car to drive yourself to work are purchases with rational motives. ● Emotional or Psychological -a motive that's not based on a person's rational, practical thoughts. Instead, it's the result of a person's feelings or emotions. Emotional motives are often a result of people's fears and desires. Purchases with an emotional motive are often the result of a want for specific products, in order to address these fears or desires. EXAMPLE Buying fashionable clothing, going to an expensive restaurant, or buying a birthday gift for a family member are purchases with emotional motives. Decision Making Every person's individual decision making style is different. However, many people find it helpful to follow a series of steps when making major purchases. Steps to making a decision ● Prioritize – what features of the product are most important to you. Decide what features you might be willing to give up in order to get a better price on the purchase. ● Research – gather information about the product you plan to purchase. Take time to consider any biases the sources of your research might have. Consider the purpose of each source. A bias is a prejudice or limit that damages the completeness and accuracy of the information a primary or secondary source is providing. QUESTION OF THE DAY Behavioral Economics Q: What percentage of people make purchases due to Fear Of Missing Out? ngpf.org 5/17/23 QUESTION OF THE DAY Behavioral Economics A: 60% of people make purchases because of FOMO, mostly within 24 hours. FOLLOW-UP QUESTIONS Have you ever experienced FOMO? How has it ever impacted your spending behavior? VIDEO FOMO: Our Relationship with Social Media The Question of the Day showed the power of FOMO, or the fear of missing out, and how it can influence our decisions around money. Watch the video to learn more about how FOMO can show up when we use social media, and what we can do to curb its impact on our choices. Questions?? Next class Tuesday at 2:15. Read content and make sure previous assignments are complete Date Class Connect? Content For Class Assignments Due Date Mon 9/4 No School – Happy Labor Day Tues 9/5 2:15-2:55 REQUIRED Class Connect 2. Self Awareness & Decision Making • Make sure you have completed: • Bucket List Quiz • PreTest Wed 9/6 2:15-2:55 REQUIRED Class Connect 2. Self Awareness & Decision Making • Self Awareness & Decision Making Quiz due Friday 9/8 9/8 Thurs 9/7 No Class Connect 2. Self Awareness & Decision Making • Self Awareness & Decision Making Quiz due Friday 9/8 9/8 Fri 9/8 No Class Connect Back to School Picnic Day!! • Self Awareness & Decision Making Quiz due by 11:59pm https://youtu.be/Ltk1hM6iu44?si=4H 9llezl8C5zsdi4 Self Awareness & Decision Making Quiz due by 11:59pm Previous Assignments: Bucket List Quiz - 10 points PreTest – 15 completion points What is a Cognitive Bias? FOMO, is a cognitive bias. So what exactly IS a cognitive bias? • A cognitive bias is a systematic error in thinking that occurs when people are processing and interpreting information in the world around them and affects the decisions and judgments that they make….Everyone exhibits cognitive bias. Cognitive Biases At their core, cognitive biases are our brain’s attempt to be efficient and make decisions quickly. They serve as mental shortcuts so that our brains can speed up information processing. However, in trying to increase efficiency, these biases can create systematic errors in our way of thinking. This is because they rely on our perceptions, observations, and experiences and not on actual facts. These biases can lead us to avoid information that we don’t like or don’t want to see. Additionally, they can cause us to see patterns that don’t exist. Tips to overcome cognitive biases While cognitive biases can be unconscious, there are a number of things we can do to reduce their likelihood. 1. Be aware 2. Consider current factors that may be influencing your decision 3. Reflect on the past 4. Be curious 5. Strive for a growth mindset 6. Identify what makes you uncomfortable 7. Embrace the opposite 8. Seek multiple perspectives 9. Look for disconfirming evidence 10. Practice intellectual humility it’s about asking, “what am I missing here?” Humans are not very good at recognizing when cognitive bias may be influencing our own judgments and decisions. Decision Making Steps Yesterday we talked about the first 2 steps: ● Prioritize ● Research Decision Making Steps Continued ● Budgeting – how much are you willing to spend on the purchase, at a maximum ● Comparison Shop – find the lowest, fairest price. ● Negotiating – bargain or haggle. Find out whether the price of the item you're purchasing is negotiable. If it is, be prepared to negotiate with information about the price the product is selling for at other retailers. Decide & Evaluate ● It's usually helpful to make your final decision about the purchase while you're not at the store or retailer. This way, you'll be able to consider your decision carefully, without feeling pressured by the person who’s selling the product. ● After you've made the purchase, think about whether you're happy with it. Does it have the features that are important to you? Does it seem as though it's high- quality, and will last a long time? Consider what went well in the purchasing process. Think about what you might do differently the next time. QUESTION OF THE DAY Behavioral Economics Q: At what age do we make our best financial decisions? ngpf.org 8/29/23 QUESTION OF THE DAY Behavioral Economics A: Age 53-54 FOLLOW-UP QUESTIONS Can efforts to increase financial literacy drive this number down, or do you think people will the age range of 53-54 always hold true? Quiz Questions?? Next class Tuesday at 2:15. Read content and make sure previous assignments are complete