💰 Part 1: Financial Decision Scenarios

1. Sarah has £500 to invest. Which option shows the BEST understanding of risk vs reward?

Put all £500 in a savings account earning 1% interest

Invest £300 in shares and keep £200 in savings

Spend it all on a holiday

Buy lottery tickets worth £500

2. When making a major purchase decision, which factors should you consider? (Tick all that apply)

Your current income

Future financial goals

What your friends think

Alternative uses for the money

The item's necessity vs want

3. James wants to buy a car costing £8,000. He earns £1,200 per month. What is the most sensible financing option?

Take out a payday loan

Save up for several months first

Use a credit card with 25% APR

Borrow from loan sharks

4. What does 'opportunity cost' mean in financial decision making?

The interest you pay on loans

The cost of financial advice

What you give up when making a choice

The price of goods and services

📊 Part 2: Problem Solving

5. Emma has £15,000 in savings. She wants to: buy a car (£8,000), go on holiday (£3,000), and keep an emergency fund (£5,000). What financial problem does she face and suggest a solution.

6. Calculate the total cost of a £12,000 car loan at 8% APR over 3 years. Monthly payment = £376. Show your working.

Total amount paid: £ ___________

Total interest paid: £ ___________

7. List three questions you should ask yourself before making any major financial decision:

8. Tom wants to save £2,400 for a holiday in 12 months. How much must he save each month? If he can only save £150 per month, what are his options?

🎯 Part 3: Decision Making Framework

9. Create a step-by-step process for making good financial decisions. Fill in the missing steps:

Step 1: Identify the financial _____________ or opportunity

Step 2: _____________ all possible options

Step 3: Consider the _____________ and benefits of each option

Step 4: Think about your _____________ goals

Step 5: Make the _____________ and review regularly

10. Extension Challenge: Design a decision-making matrix for choosing between renting (£800/month) or buying (£150,000 house with £15,000 deposit) a home. Consider at least 4 factors.