Decision-Making about Your Financial Goals

Learning Goals/Objectives:

Objectives:

• Identify the benefit of using cost-benefit analysis.

• Identify the costs of achieving a goal.

• Identify the benefits of achieving a goal.

Overview:

Procedures:

1. Begin the discussion by identifying a specific personal financial goal or restating the goal identified in Lesson 1. (eg., save for a major purchase, protecting identity, home purchase,)

Each student should be able to articulate at east one possible long-term goal and what actions they might take to achieving the goal. Other students can suggest ways to clarify the goal.

Use Handout 2, from Lesson 1, to identify the goal.

2. Discuss the costs associated with a financial decision (achieving a goal).

• Explicit costs: money

• Transaction costs: money, time or trouble

• Opportunity cost: The value of the next best alternative.

Costs can be just about anything the students identify as a negative – money, time, conflicts with other goals, etc.

Using Handout 2 to write a description of the costs of achieving the goal.

3. Discuss the benefits of achieving a goal (refer to the previous discussion.)

• Income

• Status or “psychic income”

• Future opportunities

• Leisure or lifestyle benefits

• Other?________________________

Ask: How are you better off after achieving your goal?

Use handout 3 to write a description of the benefits of achieving the goal.

4. Explain that a choice almost always involves comparing the benefits and costs of alternatives. Students should compare the costs and benefits of achieving the goal. If the costs are greater than the benefits, is the goal realistic? Refer to the SMART goals description (Handout 1, Lesson 1).

5. Given a situation, ask the students to identify the benefits and costs of achieving the goal. Pick any goal the students may all be able to identify with – a home, education, new job, etc.

An option is for small groups to identify either costs or benefits, then share their ideas. Other groups can ask questions to clarify the groups’ ideas.

6. Students can further discuss their personal choices, based on the costs and benefits identified.

Activities:

Handout 1 (Handout 2, Lesson 1)

Achieving My Financial Goal

My financial goal is…____________________________________________________

_____________________________________________________________________

The benefits of achieving my goal are... _____________________________________

_____________________________________________________________________

The costs of achieving my goal are…_______________________________________

_____________________________________________________________________

The obstacles I may face are…____________________________________________

_____________________________________________________________________

I can overcome the obstacles by… _________________________________________

_____________________________________________________________________

If I achieve my goal, I can… ______________________________________________

_____________________________________________________________________

Assessment:

Assessment:

• Students articulate the types of costs of a decision. Clarify misunderstandings.

• Students articulate the potential benefits of a personal financial decision.

• Given a choice situation, students summarize how costs and benefits influence

their choice.

Download:

Lesson 2 Decision-Making About Your Financial Goals.doc