F. Financial Literacy · Financial Decisions: Interest, Borrowing, Appreciation, Depreciation and BudgetsUsing Your Current Situation to Make Informed Financial Decisions
F1.1 A1 A2About 65 minutes
Learning goals- I can describe a current financial situation, including the facts and the context.
- I can use math, such as cost per month, percent of income and opportunity cost, to compare options.
- I can use a weighted decision matrix to combine math with values and priorities.
- I can explain and justify a financial decision, and say what would make me change it.
Words to know
opportunity cost
What you give up when you choose one option over another: the next-best thing you could have done with the same money or time.
need
Something required to live, learn, work or stay safe, such as food, shelter, winter clothing or transportation to school or work.
want
Something nice to have but not required.
cost per use (or per month)
The total cost divided by the number of uses or months. It helps compare things that last different lengths of time.
weighted decision matrix
A table that scores each option on several criteria and multiplies each score by how important that criterion is (its weight).
take-home pay (net pay)
The pay left after deductions such as income tax, CPP contributions and EI premiums.
Hook: your first paycheque
Imagine Alex, who is 15 and has a part-time job at a grocery store. Alex works 12 hours a week at $18.00 an hour (an example wage; Ontario's minimum wage changes every October, and from October 2026 it is $17.95 an hour, or $16.90 for students under 18). That is 12 × $18.00 = $216 a week before deductions. After deductions (at 15, mainly Employment Insurance premiums, since CPP contributions start at 18), Alex takes home a little over $210. To leave room for bus fare to work, we will use about $200 a week.
Alex's phone screen is cracked and the battery barely lasts a day. Alex has three options and $700 saved. What should Alex do?
This is a current financial situation. In the last lesson you learned from the past. Today you will learn a process for making a decision right now, using math and context together.
Step 2 and 3: the facts and the math
Alex's options (example prices, tax included):
- A. New phone: $1 100, expected to last about 3 years (36 months).
- B. Refurbished phone: $450, expected to last about 2 years (24 months).
- C. Keep the phone, replace the battery and screen: $120, expected to give about 1 more year (12 months).
The options last different lengths of time, so comparing only the prices is unfair. Compare the cost per month: total cost ÷ number of months.
Worked exampleExample 1: Cost per month and weeks of work
Find the cost per month for each option, and how many weeks of Alex's take-home pay ($200 a week) each one costs.
- A: $1 100 ÷ 36 ≈ $30.56 per month. Weeks of work: 1100 ÷ 200 = 5.5 weeks.
- B: $450 ÷ 24 = $18.75 per month. Weeks of work: 450 ÷ 200 = 2.25 weeks.
- C: $120 ÷ 12 = $10.00 per month. Weeks of work: 120 ÷ 200 = 0.6 weeks.
- Option A also costs more than Alex's $700 savings, so Alex would have to wait or borrow.
A ≈ $30.56/month (5.5 weeks of work), B = $18.75/month (2.25 weeks), C = $10.00/month (0.6 weeks).
Cost per month of use for each option. The cheapest price is not always the cheapest per month, but here the repair wins on cost. Cost is only one part of the decision.Opportunity cost
Every choice has an opportunity cost: what you give up. If Alex chooses the new phone instead of the refurbished one, the opportunity cost is the $650 difference and whatever it could have done.
Math can show how big that is. If Alex saved the $650 instead, at an example rate of 4% per year compounded yearly, after 4 years it would grow to 650 × 1.04⁴ ≈ $760.41, money that could go toward a bike, a course or post-secondary education.
Use today's numbers
Your current situation includes today's economy. Before deciding, check: current interest rates (on savings and on borrowing), whether prices are rising quickly, and whether your income is steady. For example, paying off a credit card that charges about 21% interest gives you a far better "return" than a savings account paying about 3%.
Worked exampleExample 2: Save or pay off debt?
Jordan has $500 in a savings account earning 3% per year and owes $500 on a credit card charging 20.99% per year. Jordan can use the savings to pay off the card. Compare one year of interest each way (use simple interest for the estimate).
- Keep the savings and the debt: Jordan earns 500 × 0.03 = $15.00 but pays about 500 × 0.2099 = $104.95.
- Net result: 15.00 − 104.95 = −$89.95, so Jordan is about $89.95 worse off after a year.
- Pay off the card: no interest earned, no interest paid.
- Context check: Jordan should keep a small amount for emergencies if possible, and stop adding to the card.
Paying off the card saves about $90 a year. The math says pay the debt first, and the context says keep a little emergency money if possible.
Step 4: the context
Numbers do not tell the whole story. Context includes:
- Needs and wants. Does Alex need a phone that works for school, work schedules and safety? Probably yes. Does Alex need the newest model? No.
- Timing. Is a sale coming, like Boxing Day? Is the old phone about to stop working completely?
- Values. Some people care about reducing waste, so a repair or refurbished phone fits their values.
- Family and community. Many teens contribute to household costs or save for gifts during holidays such as Diwali, Eid, Christmas or Lunar New Year.
- Long-term thinking. Many Indigenous knowledge systems emphasize relationships and responsibility to future generations. For example, the Haudenosaunee Seventh Generation principle asks people to consider how today's decisions will affect people seven generations from now. Asking "How will this choice affect me, my family and others years from now?" is a powerful money habit.
One way to combine math and context is a weighted decision matrix.
| Criterion (weight) | A. New | B. Refurbished | C. Repair |
|---|
| Cost (× 3) | 1 → 3 | 4 → 12 | 5 → 15 |
| How long it lasts (× 2) | 5 → 10 | 4 → 8 | 2 → 4 |
| Features (× 1) | 5 → 5 | 4 → 4 | 2 → 2 |
| Less waste (× 1) | 2 → 2 | 4 → 4 | 5 → 5 |
| Total | 20 | 28 | 26 |
Worked exampleExample 3: Reading the matrix
Use Alex's matrix to choose an option. Then explain the choice using both math and context.
- Cost has the biggest weight (3) because Alex's money is limited.
- Totals: A = 3 + 10 + 5 + 2 = 20, B = 12 + 8 + 4 + 4 = 28, C = 15 + 4 + 2 + 5 = 26.
- B has the highest total, so it is the best fit for Alex's priorities.
- Justify: B costs $18.75 a month, Alex can pay cash from savings ($700 − $450 = $250 left), and it reduces waste. The repair is close behind, but it only lasts about a year.
Option B, the refurbished phone. Alex pays cash, keeps $250 in savings, and gets a phone that should last about 2 years.
Another current situation: getting to school in a snowy province
Riley needs to get to school and work 10 months a year. A student transit pass costs $65 a month (an example price). Riley could instead buy a $400 bike, spend about $60 a year on tune-ups, and still buy a pass for the 4 snowiest months (December to March), when biking is not safe on Riley's route.
- Pass only: 10 × $65 = $650 per year.
- Bike: $400 at the start, then $60 + 4 × $65 = $320 per year.
The total cost of the pass grows by $650 a year. The bike option starts at $400 and grows by $320 a year.
Math is not the whole answer
The graph says the bike is cheaper after about 14.5 months. Context might still change the decision: Is there a safe route with bike lanes? A place to lock the bike? Does Riley want the exercise? A good explanation mentions both the numbers and the context.
Hands-on activityBuild your own decision matrix
You need: paper or a spreadsheet, a calculator, store flyers or websites (with a grown-up's OK).
- Choose a real decision you or your family faces: a new winter coat, a bike, a laptop for school, a phone plan or a gift budget.
- Find three realistic options and their prices (include 13% HST if it is not included).
- Estimate how long each one lasts and find the cost per month or cost per use.
- Choose 3 or 4 criteria and give each a weight (1, 2 or 3). Score each option from 1 to 5.
- Multiply, add the totals and make a decision. Write two sentences: one with your math, one with the context.
Model answer: winter coats. Coat X $240 lasting 4 winters → $60 per winter; coat Y $110 lasting 2 winters → $55 per winter. With warmth weighted × 3, coat X wins 27 to 22 because it is rated for −30 °C and I wait at a bus stop every morning.
Just for funOpportunity cost explained by a cat: every hour spent sleeping in the sunbeam is an hour not spent knocking things off the table. Tough choices.
Your turn
1Alex takes home $200 a week. How many weeks of work pay for a $450 phone?
2.25 weeks (2¼ weeks). 450 ÷ 200 = 2.25.
2A $720 laptop is expected to last 4 years. What is its cost per month?
$15 per month. 4 years = 48 months, and 720 ÷ 48 = 15.
3Alex chooses the $450 refurbished phone instead of the $1 100 new phone. What is the opportunity cost of choosing the new phone?
The $650 difference (1100 − 450), plus whatever Alex could have done with it, such as saving it or buying something else.
4Morgan has $800 in savings at 3% and $800 of credit-card debt at 19.99%. About how much interest does Morgan pay on the card in a year, compared with what the savings earn? (Use simple interest.)
Card: 800 × 0.1999 ≈ $159.92. Savings: 800 × 0.03 = $24.00. Morgan loses about $135.92 a year by keeping both, so paying off the card is the better choice.
5A matrix has weights 3, 2 and 1. An option scores 4, 3 and 5. Find its weighted total.
23. 3 × 4 + 2 × 3 + 1 × 5 = 12 + 6 + 5 = 23.
6Name two context factors (not calculations) that could change Riley's bike decision.
Sample answers: whether there is a safe route or bike lanes; winter weather and how long it lasts; a safe place to lock the bike; Riley's health or interest in exercise; distance to school or work.
7Sort into needs and wants for a Grade 9 student in Ontario: winter boots, a third pair of sneakers, a bus pass to get to school, a concert ticket.
Needs: winter boots, bus pass to get to school. Wants: a third pair of sneakers, a concert ticket.
More practice: warm-up
1What is opportunity cost?
What you give up when you choose one option: the next-best use of the same money or time.
2Alex works 12 hours at $18.00 an hour. Find the pay before deductions.
3Is a concert ticket a need or a want?
A want. It is nice to have but not required.
4A $240 item lasts 12 months. Find its cost per month.
$20 per month. 240 ÷ 12 = 20.
5A transit pass is $65 a month. Find the cost for 10 months.
More practice: on your own
1A concert ticket costs $150. How many hours must Alex work at $18.00/h (before deductions) to pay for it?
About 8⅓ hours (8.33 h). 150 ÷ 18 ≈ 8.33. After deductions it would take a bit longer, which is worth knowing.
2Use Riley's numbers to find the total cost of each option after 2 years. How much does the bike option save?
Pass only: 2 × 650 = $1 300. Bike: 400 + 2 × 320 = $1 040. The bike option saves $260 over 2 years.
3Sam budgets $120 for holiday gifts for 6 people. Sam then adds a 7th person. What is the new average per gift, and what are two ways Sam could adjust?
120 ÷ 7 ≈ $17.14 per gift (down from $20). Sam could lower the amount per gift, raise the total budget by saving a little more, or make some gifts by hand.
4If Alex saves $650 at 4% compounded yearly, how much will Alex have after 4 years?
$760.41. 650 × 1.04⁴ ≈ 650 × 1.16986 ≈ 760.41.
5Winter boots (a need) are 25% off the regular price of $80. Find the cost with 13% HST.
$67.80. Sale price: 80 × 0.75 = $60.00. With HST: 60 × 1.13 = $67.80.
Challenge
1For Riley, pass only costs C = 650t and the bike option costs C = 400 + 320t, where t is in years. Solve for when they are equal and interpret.
650t = 400 + 320t, so 330t = 400 and t = 400 ÷ 330 ≈ 1.21 years (about 14.5 months). Before then, the pass alone costs less. After then, the bike option costs less, and the gap grows by $330 every year.
2Alex decides waste matters more and changes the weight of "less waste" from 1 to 3. Recalculate the three totals. Does the decision change?
A: 3 + 10 + 5 + 3 × 2 = 24. B: 12 + 8 + 4 + 3 × 4 = 36. C: 15 + 4 + 2 + 3 × 5 = 36. Now B and C tie, so Alex must use another reason to decide (for example, C lasts only a year). Changing the weights can change the decision, so weights should match your real priorities.
3Kai wants a $900 laptop now. Option 1: buy it on a store card at 29.99% per year (interest charged monthly on the balance) and pay $300 a month. Option 2: save $300 a month for 3 months and buy it then, even if the price rises 2%. Which costs less? Show your work.
Option 1, month by month: interest 900 × 0.2999 ÷ 12 ≈ $22.49, balance after paying $300 is $622.49; then $15.56 interest, balance $338.05; then $8.45, balance $46.50; then $1.16 interest and a last payment of $47.66. Total interest ≈ $47.66, so the laptop costs about $947.66. Option 2: 900 × 1.02 = $918. Waiting costs less (about $30 less), but Kai goes 3 months without the laptop, which is context to weigh.
Quiz
1. What is the opportunity cost of spending $60 on a video game?
2. A $720 laptop lasts 4 years. What is the cost per month?
3. You have savings earning 3% and credit-card debt at 21%. Which choice usually saves the most money?
4. Which of these is a context factor rather than a calculation?
5. In a weighted matrix, an option scores 5 on cost (weight 3) and 2 on quality (weight 2). What is its total?
6. The Haudenosaunee Seventh Generation principle encourages people to…
Big idea: F1.1 asks students to explain how a current financial situation can inform decisions, by understanding its context and using related math. This lesson gives a repeatable process (the decision cycle) and two tools: cost per month and the weighted decision matrix. It also builds A1 (mathematical processes such as reasoning and communicating) and A2 (connecting math to lived experience and different knowledge systems).
Common difficulties:
- Comparing only sticker prices. Ask, "How long will it last? What does it cost per month?"
- Thinking the matrix gives the "right" answer. The weights reflect personal priorities, so two people can reasonably choose differently. What matters is a clear justification.
- Forgetting deductions. Pay before deductions is not what lands in a bank account.
How to help: Invite your teen into a real (low-stakes) family decision, such as choosing a phone plan or a winter coat, and let them run the matrix. Ask them to explain the decision using one number and one context reason. All prices and wages here are examples; please check current figures, such as Ontario's minimum wage, together.