Principles of Business and Personal Finance

NC Competency 006:Explain the importance of money management among government, business, and the consumer.

NC Objective 6.02:Apply the steps in the decision-making process.

I. Making Decisions

A. Importance of making decisions: Every day you make lots of choices--from the time the alarm goes off in the early morning until you crawl into bed late at night. You choose such things as where to go, what to do, and whom to see. Life is a series of decisions. Decisions are situations requiring you to make a choice. No decision is more important than your career decision. This unit will help students to understand decision- making: what it is, the things that can get into its way, and the methods.

1) Making Decisions: Have you ever seen the domino effect? Thousands of dominoes are arranged to form a pattern. Then the first domino in line is pushed over. This domino hits the next one, and on and on, until all of the dominoes have been knocked down.

The domino effect is a chain reaction. The action of one domino affects the action of the next domino. The first domino has an impact on the hundreds of other dominoes.

In this way, decisions are similar to dominoes. One decision affects the next decision. Your present decisions affect future decisions. The decisions you are now facing will have an impact on your life for many years.

B. Study the decision-making process: You might be saying to yourself right now, “I have been making decisions all my life. It’s no big deal. Why do I have to learn about something I already know how to” the answer is very simple: you want to do it better.

Decision-making is a skill. As with other skills, some people are more successful at decision making than others. Most of your decisions affect many areas of your life. it is to your benefit to make decisions as skillfully as possible.

Some decisions are much easier to make than others. For example, do you want eggs or cereal for breakfast? That decision should be fairly easy to make. Other decisions are more difficult. You have only enough money to pay for one movie, but there are three movies in town you want to see. All are leaving town at the end of the week. Which one do you choose? The more things you must consider, the more difficult a decision can become.

As you have learned, a career decision means considering a large number of factors. You will be investing many years of your life in the career you choose. Although many people change careers several times, you want all your choices to be happy ones.

II. Steps in Making Decisions

A. Seven-Steps of the Decision Making Process:

1) Define Your Need or Want: The first step in the decision- making process is to define the need that requires a decision. Be as specific as possible. Narrow the area of the need so you can focus on one need.

2) Analyze Your Resources: By now you should have a good idea of your aptitudes, abilities, values, and so on. In other words, what do you have or what can you obtain that will help you meet your need?

3) Identify your Choices: At least two choices or alternatives exist whenever a decision has to be made. What are those choices?

4) Compare the Choices: Based on the information you have about each choice, try to imagine as clearly as possible what it would be like to carry it through. Look at the advantages and disadvantages of each choice. Try to learn which choice seems to have the best chance of meeting your need, which choice is second best, which is third, and so on.

5) Choosing the Best Alternative: An alternative is a choice. Mind that none of the choices may stand way above the others. The difference between the final two alternatives may be small. Also, keep in mind that your selected choices may be changed as you gathered additional information. Hint, no decision is ever final.

6) Make a plan to get Started: Complete unless you know how you will get from where you are now to where you want to be. Planning does that for you.

7) Evaluating your Decision: When you evaluate something, you judge its worth, quality, or goodness. Once your plan isput to use, you will begin to see if your decisionwas the best one. You will evaluate it. Ifthe outcomes are good, you will continue. If the outcomes are not good, then youwill need to make a new decision.

Each step in the decision-making process may require some backtracking. Your goal may not be clear enough, or you may discover a new alternative that better meets your needs.

B. When a decision gives you trouble. Decisions give you trouble because of one of the following reasons. Most of these “reasons” are actually a lack of self- confidence in disguise.

• You think you can’t do something because of your age, gender, or race. For example, you can’t do a certain job because “you’re too young.”

• You expect too much of yourself. You think you must be able to do a thing perfectly or you can’t do it at all

• Your family expects too much of you.

• Your family’s finances can’t support what you want to undertake.

• Your friends pressure you to do what they want to do.

• Your friends or family make fun of what you want to do.

• You are afraid of failure.

• You are afraid of change.

• You do not feel sure of yourself in new situations.

• You put things off.

• You expect too little from yourself. You think you can’t do something and won’t even try.

C. Hints for making better decisions:

• Be aware of the decisions you make every day. If a decision did not turn out well, try to figure out why. Did you follow the decision-making steps?

• Practice the decision-making steps. The more decisions you make using the steps, the better you will become.

• Recognize the obstacles that get in your way. Are the obstacles things you could have overcome if you had tried a little harder?

• Check your way of looking at things. Do you look for good things to happen, or do you tend to have a “sour” outlook?

• Accept the outcome. If you made the best decision you could and things did not work out, accept the facts and move on.

• Be willing to change your decision. Decisions aren’t set in concrete. Sometimes the conditions for a decision change and a new decision is necessary.

• Remember, most decisions have both a positive and a negative outcome. However, a satisfying or positive decision has more good than bad results. Decisions that are satisfying are the ones that get you closest to what you want.

• Don’t depend on luck. The idea is to get control of your life and of what happens to you. The more thorough you are in getting the facts you need and in planning ahead, the less you will need to rely on lucky breaks.

III. Special Points to Keep in Mind about Career Decisions

A. Keep asking questions. Almost all decisions require the same steps. By spending time with each, you will make more careful decisions. However, these steps are only guidelines. You may find that the steps overlap or that you need to spend more time on one step than another. Adjust them as needed so they work best for you.

Don’t think that just because you have made a decision or career choice you should stop asking questions. Job fields constantly change. They may differ somewhat from state to state. A job may seem less satisfying than you thought it would be. Why is this? Some questions to keep in mind might be:

• Is the work boring? Will it always be?

• Does it give me a feeling of accomplishment?

• Do I want to do this type of work for 15 or 20 years?

• Am I interested enough to spend the time and money for education and training?

• How am I better off choosing this career rather than another?

• Are my skills being put to good use? Do others in the field think I can handle the work?

• Is this career available where I live now, or will I need to relocate?

B. Keep things moving.

C. Evaluate, Evaluate!

IV. Decision Making Applications

A. Decision-Making Career Application.

B. Decision-Making Facts and Review Application.