Civics Today: Citizenship, Economics & You © 2008

Chapter 20: Personal Finance and Economics

Chapter Overviews

People make economic choices every day. Factors such as scarcity, supply, and demand influence the decisions that consumers make. It is important for people to be responsible spenders. Consumers should be aware of what they are spending money on and whether they are getting best value for their dollar. Keeping a budget and establishing a savings pattern also helps consumers use money wisely.

For consumers, there are two types of income. Disposable income is the money that remains after taxes are paid. Discretionary income is the money remaining after paying the necessities. Consumers have the choice on how to spend their disposable and discretionary incomes.

Making a budget helps most consumers match expenses to income. It is important to make a budget and stick with it to avoid going into debt. Budgeting a portion of income to be saved in a savings or money market account allows consumers to save towards long-term financial goals.

To achieve financial goals, whether short-term or long-term, consumers must monitor their spending habits, save consistently, and avoid impulse buying. The earlier that financial self-control is developed the easier it will be for younger consumers to maintain financial stability as they get older.