Consumer- someone who buys a product or service 2 Types of income: Disposable income- money that remains after all taxes have been paid Spend on needs first, then wants
Discretionary income- money remaining after
paying for necessities Try to satisfy wants
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Consumerism- trying to educate consumers to buy and spend smarter Laws to protect consumers: Fair packaging and labeling act- contents and weight of products Food Drug and Cosmetic Act- ingredients listed by amount Pure Food Act- must prove products are safe
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BBB- Better Business Bureau Private group Provide info on local businesses and warn consumers
Consumer Bill of Rights
Safe product Right to be informed Right to choose Right to be heard Right to redress
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Consumer Responsibilities Smart Buying Know the product you are buying Use ads to your advantage Comparison shop Consider the pros and cons of generics Consider used items
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Reporting Faulty Products Report issue Dont void warranty Contact seller and/or manufacturer Keep record Allow time
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If truly unsatisfactory Complain in an appropriate way
In certain cases, contact the government
Every purchase has at least 2 scarce resources involved Time Income
Most involve an opportunity cost
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Budget- record of all the money you earn and spend Income- the money you earn Expenses- money you spend on everything, including what you save Surplus- more income than expenses Deficit- more expenses than income
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Credit- borrowing money while promising to pay it back later Interest- cost for the use the money Annual percentage rate (APR)- cost of credit expressed as a percentage of the amount borrowed
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Credit rating- likelihood you wont pay back the money Previous credit Job history Financial situation, etc
Collateral- property, house, car, or other valuable that
you pledge to secure for a loan Lender can seize if you dont pay
Credit cards- must pay off every month to avoid being
charged interest Bankruptcy- inability to pay debts Stays on your credit for years and people wont lend you
20-3 Key IdeasSaving and Investing
Save- set aside income for later Interest- payment people receive when they lend money or allow someone else to use their money Return- profit earned by investor Stock- partial ownership in a company typical if company does well, stock goes up- if company does poorly, stock goes down Dividend- portion of company earnings Stocks have a greater risk, but also more potential gain
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Bond- lending money to a company or government Doesnt make a bondholder part owner of the company
Bonds raise money for a company
Government can also sell bonds when they need money Ex: war bonds
Mutual Funds Pools of money from multiple people to invest in multiple stocks and bonds Less risky because your money is spread around more
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Impulse Buying- buying on feelings or emotion and not thinking about it Buying things you dont want or need Buying things to make you feel better Always borrowing money Quickly lose interest in something you bought