Personal Financial
Literacy
You as a Consumer
Learning Where and When to Buy
• A consumer is a person who buys or uses
goods and services
• Impulse buyers make purchases without
thinking about price or usefulness
–
Wise shoppers spend more time thinking
about what they buy
• Get the most out of your shopping by
paying attention to ads, going during
sales, and using coupons
• Just because it’s a low-priced item DOES
NOT mean it’s a bargain
–
Not if you can’t use it or if it’s poorly made
Judging Price and Quality
• You should be able to judge
product quality and know
how you plan to use that
product
– Must also compare prices
based on your needs
• Despite brand names, the
only way to be sure about
the quality of a product is to
study its label
Studying Labels
• Labels are on products to
protect and inform consumers
– Manufacturer info
– Package contents
– Weight and quantity
– Ingredient
– Serving sizes
– Safe handling/cooking instructions
– Warning labels
– Sell by dates/expiration dates
– Unit price
Consumer Protection Organizations
• You can take legal action if you
feel you have been misled by
unfair business practices
– Better Business Bureau
• Federal govt. also protects
consumers
– FTC regulates advertising and
labeling
– USDA inspects and grades food
– USPS makes sure mail is kept safe
– CPSC makes sure consumer
products are safe
Consumer Protection Organizations
• Most states and cities have
consumer protection
offices
• Private organizations test
and rate products, and
publish their findings in
magazines and online 
Problems Caused by Consumers
• Shoplifting costs businesses
billions of dollars each year in
the U.S.
– People take advantage of refund
policies
– Damage other’s stores or
property
– Fail to pay for purchases
obtained on credit
• Businesses past costs on to the
customers in the form of higher
prices
Pay Now or Later?
• Pay now- charged immediately
and might make you think more
about what you’re buying
– Cash, checks, or debit cards
• Debit cards operate the same
way as checks do (they draw
from the same checking
account)
– Instead of taking the time to write a
check, people use debit cards
Pay Now or Later?
• Pay Later
– Credit allows you to buy
something now and not have to
pay it until you are billed (usually
once a month)
• The amount of money you
have in your credit account
determines how much you
can buy with your credit card
– You must pay back what you
buy every month or else you
become a credit risk
Pay Now or Later?
• Credit ratings show how reliable you are
as a borrower and how
capable/honest you are at paying your
bills
• Credit ratings can affect buying a car,
buying a house, or getting a loan for a
business or going to school
• Careful not to purchase foolish things
that run up your debt
– Interest rates on debt payments and
annual fees get thousands of people into
serious financial trouble every year
Installment Plans and
Down Payments
• Installment plans let you buy
something without the paying
the full amount
– You put down a single amount to
hold the item for yourself called a
down payment
• After the down payment, the rest
of what you owe on the item
can be paid in installments until
you pay off the entire balance
Installment Plans and
Down Payments
• Large purchases are often bought on
installment plans
– A written contract outlines the payments
and due dates
• If a person fails to adhere to the contract,
the seller can repossess the item and
keep the money already paid on it
• Installment plans COST MORE than
purchasing at once
– Service charges, installment payments,
interest payments
– Wise to pay off installment plans as quickly as
possible