Step 3 Create a Plan:
Your Financial Roadmap
So what if the amount you need to save each week in Assignment 1-1 is more you receive? It’s a common situation that nearly everyone faces. The solution is to analyze the situation and make the best decision you can.
Decisions
Financial planning requires making many decisions, and making decisions about money can be particularly challenging because so many things come into play. For , you have the facts of the situation, such as your spending log. But there are many other things that can affect your
decisions as —your mood, values, culture, habits, and opinions of your friends and parents.
Some decisions are easy, such as deciding which movie to see. Of course, are more complicated and require more thought. But whether the decision is easy or hard, there’s a basic process everyone follows—the six stages of making that you may not even realize
you already go through. So let’s see how this works by analyzing an easy decision. Pretend you’re to see a movie with your friends and it’s sold out. What do you do?
1 Identify your goal. Yes, you still want to a movie.
2 Establish your criteria. Consider what type of movie you want to see, when you want to watch the movie, and how money you want to spend. By identifying your expectations in advance, you can eliminate choices that don’t meet your wants and needs.
3 Examine options. Think about whether you want to buy tickets now for a later showing of the sold-out movie, see another one that will be soon, or rent a movie to watch at home.
4 Weigh the pros and cons. Consider how your options meet your criteria. You really ’t want to wait a couple of hours, and there’s another film playing that you want to see.
5 Make your decision. Decide which option meets your criteria. Decide to buy the tickets for the movie that is playing now.
6 Evaluate results. Afterward, talk with your friends about you liked it. When it comes to the decision-making process, two of the most important elements are examining your alternatives and analyzing your outcomes. let’s look at these two elements a little further.

Say your friend Rob has two shortterm goals he wants to meet. • Goal A: $5 per week for the next four weeks to buy a new video game. • Goal B: save $10 per week for the next weeks to buy a new pair of shoes. However, Rob’s Personal Spending Record shows that he has only $5 left over each week. So asks you what to do—choose Goal A or B? Because Rob’s limited resources mean he can’t accomplish both of his goals in the desired frame, he has to make some kind of trade-off. Economists call this the opportunity cost of the decision. If Rob chooses to save for the video game right now, it means that he’s giving up the opportunity to buy those sneakers nine weeks from now. Rob has several for trying to reach his goals. In situations like this, making a decision chart can help. Just remember that many times there is no “” answer. The best decision is simply the one that feels like the best choice based on your criteria and all the information you have.

course, not all decisions are created equal. Some are just a blip on the radar screen, while others will have a lasting impact on life. In fact, some of the personal and financial decisions you make today will affect decisions you will make far into the future. For , if you take out a loan to buy a car, you could be making payments on it for the next five years. So for next 60 months, you will have less money to put toward other things you may want. Often a major decision leads to several smaller , sometimes called satellite decisions. Once you’ve decided to buy a car, you have to decide what kind of car to buy, how much money put down, what dealer to buy it from, and when to buy it. These are satellite decisions, which may lead to even more satellite . Let’s say you know which car you want. Now you have to decide which color and options package to get.