What Is a Buying Plan - Financial Literacy - أول ثانوي

Link to digital lesson 2.4 What Is a Buying Plan? www.len.edu.sa Learning Objective Once you have completed this lesson, you should be able to: explain what it means to be financially responsible identify the steps involved in creating a buying plan. Key Terms Systematic decision making Opportunity cost Financial responsibility Financial irresponsibility Buying plan Criteria Spending limit Systematic decision making the process of making choices that reflect goals by considering all of the pros and cons along with the costs Opportunity co the value benefit given up when a choice is made between two more options Financial raporlbility being able to meet your financial goals through planned earning, spending, and saving وزارة التعليم 62 Financial Literacy How to Be a Responsible Shopper As a consumer, you should shop responsibly to ensure your financial secu- rity and freedom. Responsible shopping requires systematic decision making. This requires you to be financially responsible by understand- ing your budget, your shopping aims, and the opportunity cost of your choices. Responsible shopping is focused on short-term financial planning and managing daily budgets. Financial Responsibility It is important to have financial responsibility when you are in charge of your own budget. People who are financially responsible are able to live a comfortable lifestyle, provide for their own wants and needs, and save money for known and unknown future events. Being financially responsible means you: ⚫ buy goods and services in a responsible manner . ⚫ • ⚫ understand the difference between wants and needs do not have to borrow money every time something unexpected happens, and if you do have to, you are able to repay it in a timely manner.

When you are financially responsible, you can make payments as agreed and honor your commitments. Your life is structured, you are not dependent on others, and you have learned how to manage your resources effectively. Financial Irresponsibility When people fail to take responsibility for their spending, they are una- ble to sustain their own lifestyle. This is known as financial irrespon- sibility. Symptoms of financial irresponsibility include the following: ⚫ Bills are not paid in a timely manner. • There is inadequate food, clothing, and shelter to live a comforta- ble lifestyle. Money is spent on luxury items while basic needs are not being met. A month's worth of pay checks do not last the entire month. Borrowed money is not repaid in a timely manner or at all. Celebrity or online influencers' lifestyles combined with persua sive adverts push people into purchasing items they do not need or could find more cheaply elsewhere. Money is spent on enjoyment without thinking purchases through. When individuals are unable to meet their needs, there can be high and often unpredictable costs. If help is not gained to become financially responsible, the costs can become overwhelming. Costs of financial irresponsibility can include an unhealthy lifestyle and poor health, a lack of recreation and fun, and stress. This happens to people in all income groups. Making good choices begins with using systematic decision making, which can be used to set up a buying plan. Financial imponsibility failing to live up to you! financial obligations to meet your goals and needs Buying pian an organized method for making good buying decisions وزارة التعليم 0125-1445 CHAPTER 2 Spending 63

What Is a Buying Plan? A buying plan will help you maximize limited resources. It may also help prevent buyer's remorse. When you make a major purchase or spend a large sum of money, a buying plan can aid in the decision-making process. Creating a Buying Plan A buying plan, as shown in Figure 2.4.1, is a five-step process that out- lines what it is that you are hoping to achieve. By clearly defining the steps, you will be able to choose wisely. 1. Spending goal FIGURE 2.4.1 A Buying Plan 2. Item 3. Criteria 4. Timeline 5. Spending limit Define your need, want, or spending goal. List the item(s) that will satisfy your spending goal. Describe the desired features of the item(s) that you want to buy. Identify when your goal should be met. Set an upper limit on how much you can or are willing to spend. وزارة التعليم 64 Financial Literacy Step 1: Define Your Spending Goal Any item you buy should be selected to satisfy your needs and/or wants. By evaluating your needs and wants before you shop, you will be better prepared to make good buying decisions. You should also consider how the item relates to meeting the goals you have set in your budget or financial plan. Understand that because your resources will likely be limited, you may have to forego buying other items to make your purchase. Thus, you should consider the opportunity cost, or the value of what you give up, when you make a choice. Step 2: Choose the Item to Buy Once you have defined your spending goal, you can then choose the item that will meet your goals. The process may include making deci- sions on:

new or used high-, medium-, or low-quality high-, medium-, or low-cost choices. If you only need the item for a short period of time, you may also con- sider renting the item instead of buying it. Step 3: Define Criteria Once you have decided to buy a good or service, you should set criteria for the item. For an item you want to purchase, the criteria could be the desired: ⚫ features ⚫ functions ⚫ quality • cost. Step 4: Set a Timeline For each item you want to buy, decide how soon you want to make the purchase. The timeline sets the time frame for making your decision. Time frames may depend on: Cita standards or rules by which something can be judged List the criter that you would esider accepta bat we you γιώργος & κοληματεί 65

Spunding Wind the maximum amount you are willing to pay for an item a specific activity, such as buying new clothing for graduation the actions of others, such as waiting until a store places the item on sale, Putting a time frame on each planned purchase will help you prioritize. By waiting a day or more, you may decide not to make an impulse pur- chase. Step 5: Set a Spending Limit Based on the need or want that is being met, how much money are you willing and able to spend? By setting a spending limit, you will not be tempted to spend more than you have planned. Figure 2.4.2 shows an example of a completed buying plan for a tablet and pen tablet. FIGURE 2.4.2 1. Spending goal A Buying Plan for a Tables and Pen Tablet 2. Item 3. Criteria 4. Timeline To be able to practice digital drawing easily at home or on the move Tablet and pen tablet (new or used) Tablet should be small and easy to carry. Pen tablet should have a good battery life (át least 8 hours from fully charged). 1 year or sooner درارة التعليم 66 Financial Literacy 5. Spending limit SAR 1,500 Implementing a Buying Plan When you know what type of item or service you need to buy and how much you are willing to spend, you can start to gather specific informa- tion. You will want to know what products and services are available, along with their features and prices. You may find that you need to revise your buying plan. For exam- ple, you may learn that a product with the specific features you want is not available within your spending limit. When this happens, you must change either the criteria or the spending limit.

Payment Methods Each purchase involves two choices - what to buy and how you will pay for it. Sometimes your only payment option is cash. At other times, you can choose among payment methods. You may be able to pay with a Mada or credit card, or take out a personal loan. Each payment method offers benefits: Cash can help prevent overspending. Credit cards provide protection if you have a problem with the item purchased and want to dispute the charge. Loans may be necessary for large purchases such as cars and can be spread over a number of years to make the purchase possible. LOOKING AHEAD How can you develop your ability to be financially responsible when making buying decisions? Making the Purchase Once you have gathered all of your information and decided on the product or service that will best meet your needs, it is time to buy. When making a purchase: check the item carefully to be sure it is in good condition if the item is in a box, the box should be sealed - if the box has been resealed, take the item out and examine it to make sure it is not damaged or ask for a sealed box be sure to keep the receipt as proof for the guarantee know the time period within which a product can be exchanged or returned if you find something wrong with it check for delivery costs - you might be able to save money by picking up a product yourself وزارة التعليم 123-1445 CHAPTER 2 Spending 67

What was the last pun lave you made onllae? Were you sausfied with it? ارات التعليم 68 for large, durable goods such as cars and computer equipment, make sure you review the warranty and check what after-sales services are covered. Evaluating the Purchase Once you buy the product or service and try it out, you should reflect on your purchase. You may find that you feel differently about it after the excitement of buying is gone. Sometimes, people buy things as a way to feel better, but the satisfaction this brings is often only temporary. After making a purchase, ask yourself the following questions: ⚫ • • ⚫ How satisfied am I with the purchase? Did I follow my buying plan? Did I get good value for the money I spent? Does the product or service meet the want or need for which I purchased it? SNEAKERS MY NOW

Are there ways I could have done a better job in selecting or buying? If I had to do it over again, would I still purchase the item? Answering these questions will allow you to learn from your buying experience so that you can continue to make good buying decisions. Remember, sometimes the right decision is not buying! Review Questions Choose the correct answer. 1. Which of the following is a benefit of a buying plan? a. creates buyer's remorse b. maximizes limited resources c. promotes impulse spending d. helps choose products poorly 2. An Item should be selected to satisfy wants and needs. a. true b. false 3. It is a good idea to define criteria for your purchase. a. true b. false 4. Which option is NOT related to evaluating a purchase? a. whether you went shopping alone or with friends b. how satisfied you are with the purchase c. whether the purchase was good value for money d. whether the purchase matches your needs or wants 5. Which of the following is NOT usually a goal of a financially responsible person? a. living a comfortable lifestyle b. providing their own wants and needs closing all of their financial assets d. saving money for unknown future events 6. An opportunity cost is the option or benefit given up. a. true b. false وزارة التعليم 0127-1445 CHAPTER 2 Spending 69