Plan
Your Financial Life (National Academy Foundation)
Chapter
One: The Cost of A Convertible Everyone
in the class envied Erik
when he bought his new red convertible. What his classmates
didn’t know was that the $22,000 he spent on the car came
out of a $35,000 savings account that Erik’s parents had saved
for his college education. Erik convinced his parents to let
him spend the money on the car because he wanted to enjoy
his life now. He thought the car would bring him attention
and make him more popular.
Erik
is sure he made the right decision. He heard that a college
education would give him a better salary in the future, but
he’s more interested in immediate gratification. Erik decided
that he would get a job after high school and save some of
his earnings. He also plans to invest the remaining $13,000
that his parents had saved for his college education.
Apply
What
are the three major decisions Erik made? What are the opportunity
costs for each of his choices.
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