Financial Decision Making Is An Important Aspect Among All The Consumer Behaviors

People make economic decisions on a daily basis, from choosing to go to the grocery store and cook dinner or going out to eat. While in the general scheme of things this is a relatively small decision to make it still can have impact on the economy. Yet a decision for a family to have a child is more of a major decision and has far more of an impact on the economy then a dinner decision. There are four basic principles to economic decision making and in the following I will list and explain these. I will also provide and an example of a decision that I have made in my personal experiences and what impact that has had or could have had

Attitudes about spending changed drastically. At this point, more people had access to credit cards because credit card companies stopped limiting their customer base to the wealthy, and began issuing cards to people with moderate to low incomes (Garon, 2012, CNN World). This gave Americans a way to purchase goods and services immediately, even if they didn’t have the cash on hand. The seven to eight percent savings rate maintained in the United States from the 1960s to the 1980s plummeted to less than two percent, and remained so until the first decade of the 21st century (Melicher & Norton, 2014, p. 168).

In today’s economy, decision-making skills vary for each household; however, the bottom-line goal for every individual is to get the most for their money. In order to do this, there are 4 principles of individual decision-making: facing trade-offs, evaluating what one is giving up to obtain their goal, thinking at the margin, and responding to incentives.

The study will be financial literacy effectiveness with Rent to Work’s clients. Rent to Work is a rental assistance program for homeless individuals and families. The Rent to Work is operated by the Department of Community Services for the City and County of Honolulu, Hawaii. The method used will be a pre-survey and post-survey to understand skills obtained during the financial education class, Money SMARTS. The areas measured are developing financial goals, opening a bank account, establishing a budget, saving money, repairing credit, and using credit responsibly. The survey involves collaboration with Kūlia Like, which is the agency that administers the course, to the gauge the necessity of Money SMARTS, a financial literacy class. Financial literacy has many definitions, but for this paper, the definition is the understanding about individual or family finances and the application of the skills to make responsible financial decisions (Delgadillo,

Beginning in the twentieth century, household debt levels were increasing as the standard of living was rising. As technology and innovation was becoming a large part of industrial growth and new commodities were becoming available to consumers, households began demanding a wider array of goods and services. These commodities included vehicles, appliances and other modern devices were heavily demanded by North American and European consumers. These commodities were purchased on credit and were considered ‘easy credit’. This allowed the mindsets of consumers to shift from saving to spending.

To summarize that personal finance is important and some serious issues can occur if we don’t manage our money in more conservative ways. In contrary, if we have well prepared and managed our money effectively, we

Business Insider asserts that “nearly half of American households don’t save money.” People are trying to get the best opportunity cost they can by finding the best deals on what they think saves them time. The problem is when people start spending money on nonessentials that they wouldn’t normally buy without society’s pressure of being like everyone else or without a special deal. This turns into obsession and the trend is hard to break, so Americans lose a lot of their money, and instead of saving for retirement or other essential purchases, they spend on temporary possessions. My mom used to tell me when we got coupons in the mail to not use them on things that we wouldn’t normally purchase. This is an example of materialism, if you would buy something just because you would save money when you wouldn’t have bought it otherwise; it is a sin and should be stopped. Leo Babauta writes that fear is the cause of greed and too much stuff, and while we wish to change our materialistic habits, laziness keeps us from doing so. We have no one to blame but ourselves for our materialism.

“The average American owns 3.5 credit cards and $15,799 in credit card debt… totaling consumer debt of $2.43 trillion in the USA alone.” (Beckner). Debt forces many people into depression and worrying lives. People struggle to discover happiness through financing goods, but struggle even more to find a way out of debt. Through consumerism, people lose their finances in department stores, car dealerships, and much more. Most of the possessions people buy with credit cards become impractical within a few months. The void they search for is never really filled. Consumerism is just a way to get the economy going, without thinking of a person’s individual finance

The misuse of credit cards has a negative effect on many American households. Bragg (2010), " According to Bragg (2009) “According to the Nilson Report, a credit industry newsletter, the average American household has $8,329 in credit card debt” (para. 1). Richardson (1999-2010), “As of January 2008, the percentage of credit card accounts that were 30 days past due or more was 4.18 percent in the fourth quarter of 2007, according to the American Bankers Associated” (Effects, para. 3). When Americans realize they are credit card abusers and they determine that they are in need of some help with managing their credit card account (s), they tend to seek professional help from outside agencies for a fee such as, debt consolidation services and consumer credit counseling services. These companies that help individuals reduce their debt if it grows out of control. Taylor (2010), "If you're in over your head with credit card help, there are many free sources you can turn to for help with your debt. No one can make

There was also no effect on financial literacy, Pearson chi-square (3) = 6.09, ns. There was an insignificant trend with incorrect answers when thinking about romantic relationships and all three primes had lower rates than the control condition. The participants may have been preoccupied about delegating financial responsibility to their partners.

Soman and Cheema (2002) conducted a study to measure consumers’ willingness to use credit to finance current consumption. They examined the size of the credit limit and the propensity to spend when the consumer believed the credit limit represented future earnings potential. This was referred to as the consumer’s credibility of the limit. The coefficients used in the study were age, years using credit, experience, number of credit cards owned, extent of usage, predicted credibility of the limit and credit limit. The two-stage least squares regression results indicated that consumers’ beliefs regarding credibility decreased with age, experience and the number of credits cards held by the consumer. Age, experience and the number of credit cards held were negative coefficients in the regression analysis. The credit limit x credibility coefficient was positive in the regression analysis, which suggests that the effect of the credit limit on spending increases as the credibility of the limit increased. The study determined that credit limits influenced spending decisions positively but only when the consumer’s credibility of the limit was high. The study also determined that naïve consumers were affected the most by increased credit limits. Older and more experienced consumers did not continue spending as much when their credit limits increased in comparison to younger and less experienced consumers.

Not only for those seeking to retire, the business motivated economy has transfigured how one must live in order to live comfortably. Building credit through credit cards is not the only way in order for a buyer to appear credible. Yet in the quest for the optimal credit score people enter into debt. Considering and evaluating the risks and benefits to credit cards may contribute to opinions towards those flimsy pieces of plastic.

College students is a representative group in current society. To the vast majority of them, college enrollment may be the first time to experience financial independence without parent 's supervision. With more disposable money from either parents or part-time job, money management appears to be very important for college students. Among Chinese consumers, college students represent the biggest segment of the total Internet users (CNNIC, 2013). However, limited research has been conducted to better understand the financial behavior (e.g. savings and indebtedness) and tendencies of this special group, since the concern over the role of young consumers is relatively new. Those who are about to enter into society will add new blood with great investment potential to financial market. Understanding this group’s financial behavior and tendency are important for marketers to develop strategies to target big consumer

As the future approaches, it is crucial to prepare for the upcoming financial fiasco as a college student. In the time we live in, the costs of attending college have continued a harsh incline, leading to a major amount of student debt. Not to mention, students have to deal with their own finances for the first time in their life. Unfortunately, many students exit university with a mass amount of debt, as a harsh welcome to the real world. Colleges have begun to lend financial help through seminars and classes to help prepare students and perhaps avoid stupendous amounts of debt. Financial responsibility can come from a combination of financial planning, understanding, and

Consistent with Kwast and Kennickell (1997) research, wealth has an important role to play in terms of consumer’s decisions on payment choice. Consumers’ wealth may influence payment choice and the availability of payment instruments that one can choose. For instance, while wealthy consumers may be able to fund their obligations generally, consumers that experience brief financial shortfalls may not find electronic bill payment desirable as a payment instrument.