F1.4 Identify various societal and personal factors that may influence financial decision making, and describe the effects that each might have.
Skill: Identifying How Various Societal and Personal Factors May Influence Financial Decision Making
There are many influences on financial decision making, some of which will help in making more informed financial decisions, while others lead to less effective financial management.
The following are examples of negative and positive influences on financial management. This list is not exhaustive. It is important that students recognize examples that are relevant to them.
|
Influence |
Example of a Positive Impact |
Example of a Negative Impact |
|
Social media, advertising, consumerism and peer pressure |
A personality present on social media could express a detailed review of an item, informing us before making the purchase. |
A celebrity endorses a product for his or her own financial gain, leading to a false impression about the quality of the item or the need to make the purchase. |
|
Social movements and personal convictions |
A campaign to raise awareness about modern slavery makes people decide to buy products from responsible and fair trade sources. |
The use of certain high-end products related to one's personal convictions could result in significant expenses, when comparable cheaper products may exist. |
|
An emergency situation (job loss, repairs, recession) |
As difficult as it is to see the positive side of such a situation, budgeting should identify expenses that are unnecessary or redundant, should an emergency arise. Developing the habit of saving a portion of your income for emergencies is another consideration. |
An unexpected expense may force the individual to use expensive financial products, such as credit cards, which increases the total value of the expense. Experiencing a difficult financial situation may cause expenses to become a source of stress, even if the current financial situation has improved. |
|
Health, family and personal context |
Categorizing health, hygiene and family wellness expenses as needs creates financial priorities that will have a positive impact. |
Family circumstances could preclude part-time employment, for example, if a student must be present or available for their siblings. |
There are also scenarios where there are no positive outcomes. Systemic oppression, for example, can result in an entire group of individuals not having equal opportunities to obtain education or employment and earn wages. This oppression, also known as discrimination, reduces or prevents access to certain opportunities based on gender, race, sexual orientation, age, disability, or any other characteristic that categorizes individuals. This is a difficult topic to discuss, but important to address, as awareness of systemic oppression is a first step toward systemic changes to address it.
There are many resources for learning about systemic oppression, including the Statistics Canada website, which collects and analyzes data from a variety of sources. Again, the goal of such a discussion is to acknowledge the existence of systemic oppression, not to instill guilt in students. The teacher needs to know the students in his or her classroom and guide conversations based on professional judgment.
Knowledge: Financial Decision Making
Financial decision making is the process of weighing the pros and cons of a decision related to the use of money.