personal finance the economic way of thinking. the handy dandy guide the handy dandy guide is based...
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PERSONAL FINANCE
The Economic Way of Thinking
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The Handy Dandy Guide
The Handy Dandy Guide is based on six ideas of economic reasoning:
1. People choose We always have a choice –
though sometimes the choices can be very difficult
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2. All choices involve cost Dollar cost Opportunity cost: your next
best option you could have made but did not make.
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3. People respond to incentives in predictable ways
One powerful incentive is money As well as working for money,
people can save money and earn interest on their savings
People can use their savings to buy more goods and services in the future
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People create economic systems that influence choices and incentivesThe American economic system
relies on markets, choices and incentives
Every decision comes with an opportunity cost
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5. People gain when they trade voluntarily
Doing something because you want to, not because someone forced you to do it
People must decide if the benefits are greater than the costs, gather sound information and trade carefully
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6. People’s choices have consequences for the future
Most people live for today, but also for tomorrow
People are affected by good and bad luck, but overall people shape their futures by the decisions they make