Term 1 (36.
5/40)
Consumer and Financial Decisions
Commerce: the interchange of goods and services for money
➔ All the activities people undertake to conduct business including selling, buying,
working, producing, bargaining, managing, planning community, etc
Consumers: individuals who buys goods and services
Needs: fundamental requirement for a person to survive and maintain health and wellbeing
➔ Eg. food, water, shelter, clothing, healthcare, sleep
➔ Primary needs are basic necessities that humans need to live
➔ Secondary needs are after primary needs, often social or psychological, similar to wants
Wants: desires or preferences that aren’t necessary but enhance the quality of life
➔ Eg. car, fancy house, holidays, luxury clothing
Locally made products: made in Australia, locally or interstate
➔ Higher quality
➔ Expensive labour, higher prices
➔ Supporting local businesses and workers
Imported (Global) Products: made overseas
➔ Inferior quality
➔ Cheaper labour, lower prices
➔ Increase of cheap imports in developing countries
Tangible (Durable) Goods: goods you can touch
Intangible (Non-Durable) Goods: goods you can’t touch, services provided to customers
Complementary Goods: goods that are generally consumed with another good
Substitutes: goods that can be purchased as an alternative to another good
Resources: things you use to get what u need, money, time, skills and knowledge
Caveat Emptor: let the buyer be aware, they should know their responsibilities
Comparison Shopping: checking prices, quality and features of different products before buying
EFTPOS: Electronic Funds Transfer at Point of Sale, allowing to pay without cash
➔ Credit cards, debit cards, mobile wallet, phone
➔ Increased convenience, less crime, innovative, tax revenue
➔ Financial exclusion, cyber security risks, system failures, privacy, technology
Consumer Decisions: financial, business, employment, legal and environmental factors
➔ Financial decisions include how much income is needed to save/spend, to
create the greatest satisfaction, a plan is needed (budgets)
➢ Income is the money received daily from work, investment, etc
➔ Business decisions is choosing who are you selling to, how much you’re
charging, where you’re buying supplies, marketing, etc
➢ Business is an organisation that produces and sells goods, profit
➔ Employment decisions is important, consider your abilities, internet and
personality, the careers market and how you become qualified
➔ Legal decisions protect consumers’ rights and defining their responsibility
➔ Environmental decisions can affect your physical quality of life, protecting
the environment for now and the future
➔ Price (in your budget), quality (is it reliable), service (what kind of
customer service is available), convenience (easy to buy/use), ethical (is
company socially responsible), warranties (protection/replacement policy)
➔ When making decisions, the steps u need to consider is to set a goal, list
resources, shop carefully and evaluate purchase
➔ Cost does not reflect quality
➔ To evaluate decisions, think if you like it, does it work, wait to evaluate
and if you consider buying it next time
➔ When shopping online, keep in mind shipping costs, how you will pay, the
safeness and if you can test it prior
➔ Routine decisions is daily and low involvement
➔ Impulse buying is buying something without consideration or planning
➔ Informed decisions is researched and thoughtful purchases, good for
major decisions
Consumer Protection: there are different laws and organisations that aim to protect consumers
➔ It protects buyers of goods and services against low quality or dangerous
products and advertisements that deceive people
➔ It aims to ensure that all consumers have the same basic rights and that
businesses undertake fair practices
➔ It is necessary because of the increases the competition in consumer
market, growing number of businesses and brands and the influence of
technology
➔ Competition and Consumer Act 2010 (CCA) promotes fair trading and
healthy competition in the marketplace covering issues such as unfair
market practices, price monitoring and product safety
➔ Australian Consumer Law, 2011 (ACL) is part of the CCA, covering
consumer guarantees, warranties and protections against deceptive
conduct, ensuring they are treated fairly when buying and providing
remedies
➔ Australian Competition and Consumer Commission (ACCC) enforces the
CCA, promoting fair business practices and consumer protection
➔ Fair Trading Act 1987 provides protection within the stare (NSW)
➔ Looking for the best deals, asking the right questions, comparing prices
and quality and complaining when things are wrong can protect you
Contracts: legally binding agreements between 2 or more parties, can be oral or written
➔ The contract must have a legal objective
➔ It must be possible for both parties to perform
➔ Must be considerate and both parties must benefit in the same way
➔ People have a legal right to enter into a contract (unless a minor)
➔ Both parties must have intended to enter the contract
➔ There must be an offer by one party and accepted by the other
➔ Offer, acceptance, consideration and condition
Debt: money owed for the bank, money lenders
Managing Finances: budgeting, saving, monitoring and record keeping, avoid over commitment
➔ Set clear goals, contribute regularly, diversify investments, monitor fees
and costs, review and adjust maximise tax benefits
Legal Rights: Consumers in Australia are protected by the Competition and Consumer Act 2010
(CCA) under schedule 2 and the Australian Consumer Law (ACL).
➔ Consumer guarantees: goods and services must have acceptable quality, match
descriptions and fit the purpose
➔ Right to refund or replacement: if a product is faulty, doesn’t work as advertised
or doesn’t meet consumer guarantees, the consumer has the right to a repair,
replacement or refund
➔ Protection from unfair practices: ACL prohibits false or misleading advertising,
deceptive conduct and unfair contract terms
➔ Product safety: unsafe goods and services can be recalled, there are strict
obligations on manufacturers and suppliers
Responsibilities of Consumers: While they have protections, they also have responsibilities
➔ Reading contracts carefully before agreeing
➔ Using goods and services as intended
➔ Keeping receipts as proof of purchase
➔ Being honest and reasonable when seeking a refund
Scams: deceptive act or organisations to trick people into giving up money
➔ Phishing is fake emails or messages to steal personal information
➔ Pyramid schemes are illegal investments relying on recruiting others
➔ Online shopping scams include fake websites or non delivered items
➔ Charity scams is fake appeals for donations
Term 2
Investing
Investment: putting money into something to make a profit or earn an income
➔ Generates future income
➔ Save for long term goals
➔ Increases wealth through compound interest
➔ Protects saving from inflation
Types of Investments: different investments are useful for different goals
➔ Shares is buying part ownership of a company, high risk, high reward
➔ Property is buying real estate to rent or sell, medium high risk, medium
high reward
➔ Savings account is depositing money into a bank account, low risk, low
reward
➔ Managed funds is pooled investments managed by professionals,
medium risk, medium reward
➔ Superannuation is mandatory retirement savings, low medium risk,
medium reward
Risk and Return: high risk = high return
➔ Risk tolerance depends on age, financial situation and goals
Diversification: spreading investments over different assets to reduce risk
➔ Prevents large losses from one investment failing
Influences on Investment Decisions: there are factors that influence investment choices
➔ Interest rates affect loans and saving returns
➔ Economic decisions, recession, share prices
➔ Government policy, tax benefits, returns
➔ Financial goals, short and long term
➔ Market trends and media impact confidence and decisions