F. Financial Literacy · Money and Finances: Exchange Rates, Budgets, Financial Decisions and Interest

Societal Factors in Financial Decisions

F1.4 A1About 45 minutes

Learning goals

I can name societal factors that influence money decisions.
I can explain how inflation changes what money can buy.
I can analyse advertising, sales and trends with math.
I can describe the effects of economic, social, cultural and technological factors.

Words to know

societal factor
Something in the world around you that affects money decisions: the economy, government, advertising, media, friends, culture, technology and world events.

economy
How a country or region makes, buys and sells goods and services.

inflation
When prices in general go up over time, so each dollar buys less.

purchasing power
How much your money can buy.

marketing
Ways businesses get people to buy things, like ads, sponsorships and sales.

peer pressure
Feeling pushed to do what friends or people your age are doing.

subscription
A payment that repeats automatically, like monthly, until you cancel it.

The price of a hockey season

Owen's mom says, "When I played house league hockey, registration was much cheaper than it is now." Is she right, or does it just feel that way?

Prices usually go up over time. That's not Owen's choice or his mom's. It comes from the economy, one of many societal factors: things in the world around us that affect our money decisions.

Youth hockey skates, a helmet, gloves, shin pads and a stick laid out on a bench in an arena change room. — Hockey equipment and registration usually cost more each year. Inflation is a societal factor that families cannot control. AI-generated image

Societal factor	Examples	Possible effect
The economy	Inflation, jobs, interest rates	Rising prices mean a budget buys less; rising interest rates make borrowing cost more
Government	Taxes (13% HST in Ontario), benefits, rules	Taxes add to prices; benefits and programs can help families
Advertising and media	Ads, influencers, sponsored posts, "limited time" sales	Can make you want things you didn't plan to buy
Friends and trends	Peer pressure, what's popular	You might spend to fit in
Culture and family traditions	Holidays and celebrations, like Diwali, Christmas, Eid or Lunar New Year; gift-giving; supporting relatives	Some times of year cost more; families may plan for them
Technology	Tap to pay, online shopping, apps, subscriptions	Spending is fast and easy, so it's easy to lose track
Environment and world events	Storms, droughts, shortages	Can make some prices go up quickly

Societal factors and how they might affect money decisions.

Inflation: why prices go up

Inflation means prices in general rise over time. If inflation is 4% a year (an example rate), something that costs $100 this year costs about $104 next year.

When prices rise faster than your income or savings, your purchasing power goes down: the same money buys less. The Bank of Canada tries to keep inflation low and steady. It has an online inflation calculator you can try with a grown-up.

Worked example

Example 1: Inflation over two years

A family's weekly groceries cost $80. If prices rise 4% a year (example), what will the same groceries cost in 1 year and 2 years?

Year 1: 4% of 80 = 3.20. 80 + 3.20 = $83.20.
Year 2: 4% of 83.20 = 3.328 ≈ 3.33. 83.20 + 3.33 = $86.53.
Notice year 2's increase ($3.33) is bigger than year 1's ($3.20), because 4% is taken of a bigger price.

$83.20 after 1 year and $86.53 after 2 years. Over a year of 52 weeks, that's a big change for a family budget.

The same groceries cost a little more each year. The second increase is bigger than the first because 4% is taken of a bigger price.

Worked example

Example 2: Purchasing power

Jun's allowance is $20 a week. A comic costs $5, so Jun can buy 4. Next year the comic costs $6.25, and Jun's allowance is still $20. How many comics can Jun buy now?

20 ÷ 6.25 = 3.2, so Jun can buy 3 whole comics.
Price increase: 6.25 − 5 = 1.25. As a percent of 5: 1.25 ÷ 5 = 0.25 = 25%.

Jun can buy only 3 comics instead of 4. The price rose 25% but the allowance didn't, so Jun's purchasing power went down.

Jun's allowance stayed at $20, but the price rose 25%. Now the same money buys 3 comics instead of 4.

Worked example

Example 3: Is it really a deal?

A store ad says: "T-shirts $12 each. Buy 2, get 1 FREE! This weekend only!" Mia needs one T-shirt.

With the deal: 3 shirts for 2 × 12 = $24, which is $8 per shirt.
Without the deal: 1 shirt for $12.
Mia spends $12 more with the deal for shirts she doesn't need. "This weekend only" adds pressure.

The deal is good value only if Mia really needs 3 shirts. A lower price per item isn't a saving if you spend more than you planned.

Worked example

Example 4: Subscriptions add up

A family has four subscriptions: $9.99, $12.99, $6.99 and $14.99 a month. How much is that in a year?

Per month: 9.99 + 12.99 + 6.99 + 14.99. Round each up to the next dollar: 10 + 13 + 7 + 15 = 45, then subtract 4 cents: $44.96.
Per year: 44.96 × 12 = $539.52.

$539.52 a year. Technology makes small repeating payments easy to forget, which is why it's smart to review subscriptions.

Ask "Who benefits?"

When an ad, influencer or trend makes you want something, ask: Who benefits if I buy this? Influencers may be paid. Stores want you to buy more. That doesn't mean you shouldn't buy, but it helps you decide for yourself.

It's okay to be different

Saying "No thanks, I'm saving for something" when friends are spending can be hard. Friends who care about you will understand. You can suggest a free plan instead, like skating at an outdoor rink or a board game night.

Just for fun

"Buy 2, get 1 free!" sounds generous. But if you only needed one T-shirt, the store just got you to spend twice as much!

Hands-on activity

Ad and price detective

You need: a store flyer or a grown-up's help looking at ads online, paper, a pencil and a calculator.

Find three ads or deals. Write down the exact offer (for example, "Buy 2, get 1 free" or "30% off").
For each one, calculate the real price per item and the total you'd spend.
Name the societal factor at work (advertising, technology, trend, holiday, etc.) and any pressure words like "limited time" or "only today".
Bonus: Ask a grown-up what something cost when they were your age (like a movie ticket, bus fare or a carton of milk). Compare it to today's price and find the percent increase.

What to look for: correct unit prices, noticing when a deal makes you spend more, and naming the factor.

Your turn

Is inflation a personal factor or a societal factor?

A $50 item goes up 6%. What is the new price?

Hockey registration rises from $400 to $440. What is the percent increase?

"30% off" a $70 pair of jeans. What is the sale price?

Name one way technology affects how people spend.

Your friends all buy a $40 trendy water bottle. Which societal factor is this? What could be the effect?

More practice: warm-up

What is inflation?

Name two societal factors.

What is the HST rate in Ontario?

A $10 item rises by 10%. New price?

What does subscription mean?

More practice: on your own

A movie ticket costs $12.50. With 3% inflation for 2 years (example), about what will it cost? Round to the cent each year.

An influencer's sponsored hoodie costs $65. A similar store-brand hoodie costs $39. What percent less is the store brand? Round to the nearest whole percent.

A pack of 4 juice boxes costs $3.96. A pack of 10 costs $8.90. Which is the better unit price? When might the smaller pack still be the better choice?

Your income stays at $25 a week. A snack you buy rises from $2.00 to $2.50. By what percent did the price rise? What happened to your purchasing power?

Explain how family traditions or culture can affect a family's budget. Give an example.

Challenge

Savings of $500 earn 2% in a year, but prices rise 3% that year (example rates). After one year, can the money buy more or less than before? Explain with numbers.

A store raises a $40 price by 25%, then has a "25% off" sale. Is the sale price back to $40? Show why.

Pick two societal factors and describe how each might affect a family deciding whether to buy a car now or wait a year.

Check your understanding

Quiz

Which is a societal factor?

A $200 item rises 5%. What's the new price?

If prices rise but your income doesn't, your purchasing power...

"Buy 2, get 1 free" on $15 items. What do you pay for 3?

Four subscriptions at $10 a month each cost how much in a year?

An influencer is paid to show a product. The best question to ask yourself is...

A price goes up 25% and then down 25%. Compared with the start, the final price is...

For parents and teachers

Big idea: This lesson completes F1.4 with societal factors: the economy (inflation, interest rates), government (taxes like 13% HST), advertising and media, peers, culture and traditions, technology and world events. Students describe effects and use percents to analyse them.

Common difficulties:

Percent increase: divide the change by the original amount, not the new one.
Two-year inflation: the second year's percent is taken of the new price.
"Deals": a lower unit price doesn't save money if you buy more than you need.
Up 25%, then down 25% is not back to the start.

How to help: Compare a price from your childhood with today's. Look at a flyer together and decide which deals are actually good for your family. Review subscriptions together if you're comfortable. All inflation and price figures are examples. This lesson builds A1 skills: critical thinking and building healthy relationships (handling peer pressure).