Chapter 1 Making the Most of Your Resources

Chapter 1

Making the Most of Your Resources

Learning Intentions Upon completion of this chapter you should be able to: • Explain what resources are • List the main resources available to you • Understand illustrate the difference between needs and wants • Match your resources to your needs and wants • Illustrate how your needs and wants are likely to change over time • Understand the difference between financial cost and opportunity cost • Appreciate the impact of your use of resources on the lives of other people

What are resources? A resource is anything which we can use in order to meet our needs or achieve our goals. Types of Resources • Physical / Capital Resources: e. g. buildings, vehicles, computers, machinery, phones and books. • Natural Resources: e. g. land, water. • Financial Resources: e. g. wages, savings, income from benefit, access to borrowings. • Human Resources: e. g. ability to read / write, creativity, experience, family & friends, teachers, coaches. • Time: We can use our available time to learn skills or carry out work etc. When it comes to resources, remember that access to resources is more important than ownership of them. For example, you have access to many resources in school even though you do not own them. Activity Can you make a list of what these school-based resources may include?

Needs and Wants A need is something which we simply can’t do without or something which plays a very important part in our lives. • Some needs will be essential for our entire lifetime. Can you think of examples? • Other needs will change as we grow and develop from children to adults. Can you think of examples? A want is something which we would really like to have, something which may improve our quality of life, but which is not essential. This list of wants could really be endless since most of us could think of many desirable things which we’d love to have. As we saw with ‘needs’ our list of wants is likely to change from childhood to adulthood. Activity Can you list 3 items under each of the following headings? Child’s Wants Teenager’s Wants Adult’s Wants

Resources are limited Our needs and wants may be endless, but our resources are not! I want an expensive sports car, but only have enough money to buy a small second hand car. In this example the financial resource (money) is able to satisfy the basic ‘need’ for transport but not the ‘want’ for an expensive sports car. • Limited resources mean we cannot have everything we want or need. • Limited resources force us to make choices between alternatives. • The choices we make have an impact on the lives of others. Activity What do you think this last statement means? Can you illustrate this with examples.

Managing Financial Resources • Money is anything of value that is accepted by people in exchange for goods and services. • Money is a scarce and valuable resource which can be used to improve our lives and the lives of those around us. • When making choices between alternatives it’s important to prioritise spending on the most essential items first.

Counting the Cost of Everything you buy has two costs: 1. A Financial Cost: This is the money cost of the item you choose to buy. 2. An Opportunity Cost: This is the cost in terms of the ‘next best thing’ you could have done with your money. When you decide to use your money for one particular purpose you lose the chance (opportunity) to do something else with that money. Example Option 1: Spend € 10 on phone credit OR Option 2: Spend € 10 on a cinema trip. • If you choose the phone credit, the opportunity cost is the cinema trip. • If you choose the cinema trip, the opportunity cost of that decision is the phone credit which you cannot now afford to buy. Weblink Click on the link below to watch a video about the opportunity cost of footballer Paul Pogba: http: //www. irishtimes. com/sport/soccer/english-soccer/from-tayto-crisps-to-nights-in-atravelodge-what-would-pogba-s-fee-get-you-1. 2750551

Money Doesn’t Grow On Trees Since money is a scarce resource, it’s important to make the best possible use of it. Being ‘money-smart’ means: Thinking about where your money comes from. . . and also where it goes Being able to live within your means Being able to plan for future spending needs Being able to save regularly Being able to calculate and pay your taxes Understanding the dangers associated with overspending and borrowing Being able to make informed decisions about managing personal finances Understanding what a personal financial life cycle is, and being able to prepare one for yourself • Using your money wisely … because it doesn’t grow on trees you know! • •

Recap and Review Can you do the following? • Explain what resources are. • List the main resources available to you. • Understand illustrate the difference between needs and wants. • Match your resources to your needs and wants. • Illustrate how your needs and wants are likely to change over time. • Understand the difference between financial cost and opportunity cost. • Appreciate the impact of your use of resources on the lives of other people.