13. Making a personal budget

When we live on our own we understand that something should be done with our unlimited wants and limited resources. We should use our income as effectively as possible. Choices must be made concerning spending and saving. We never know whether we can afford another outing or a concert. Then we come to the conclusion that we must develop a useful personal budget. And if we want to do it we should keep track of our actual income and expenses for a month.

Money resources may include allowance, part-time jobs, interest on savings. We must list all sources of income.

Then we should record how much we spend for food, entertainment, clothing, college supplies, personal care, transportation, and miscellaneous items. You wonder in which category you spend the most and the least. You think that you should decide what changes to make in the budget if you want to reduce your expenses.

We have to understand that there is some difference between fixed, optional and flexible expenses. Fixed expenses are set in advance and must be paid regularly (e.g. rent payments, tuition). Flexible expenses are necessary but change with circumstances (food, clothing, college supplies). Optional expenses vary and are not always necessary (entertainment, personal care).

Thus we can compare our income and expenses. We should understand if we want to live expenses must not be higher than income.

14. The value of college education

Every year millions of students graduate from school. The decisions they make will affect the rest of their lives. Some will choose to go to college; some will want to get full-time jobs; others will decide to obtain technical job training. In every case, economic reasoning will help students make better choice.

Everybody decides to consider the costs and trade-offs connected with a decision to go to college. And the main question in this situation is like: Is a college education worth the expense in terms of immediate and future personal growth and economic well-being?

The opportunity costs of going to college include a loss of income and a loss of practical job experience while attending college. Some people think that investment of money is better than receiving college education. It’s, of course, can be true but where do we get money if we don’t have education? Nobody will give us a job if we haven’t got education and knowledge.

I am sure that my further education is worth the time and money involved.

15. Comparing prices

Learning to make informed decisions about buying food will result in economic skills that last a lifetime. I would like to single out the steps in decision-making.

To understand how buying decisions are made I would advise you to make a shopping list of 10 basic food items, then go to several shops and find out the range (диапазон) of unit cost for each item.

To begin with you should consider the first step “What kind?”. The variety of a certain commodity in a supermarket is often confusing, there are plenty of different brands. The next step under discussion should be “How much?”. After deciding what kind of commodity to buy, consumers generally consider the price. Another consideration is the quality of the product, thus I suggest that the next step can be

“How good?”. Please take into consideration that although quality or kind of a product contribute to the price, generally the larger the quantity, the less per unit cost.

Buying in quantity often help us to spend less.

At the same time there is one more very important factor influencing buyer’s decision. I mean advertising. My personal opinion is that ads emphasize only the good qualities of a product. You probably know how ads try to attract consumers by appealing to their emotions. For example, diet bread ad shows thin people playing at the beach.

In conclusion I’d like to stress that many factors influence buying decisions, and choices are not simple for consumers. It’s absolutely true that smart buyers must obtain product information and then compare and evaluate that information.