Fuel rises, routes change
Training 1505 minutesoil shock
A raw-material shock changes lives far from its source. An oil shock begins in 1973 and sharply raises oil prices. Next comes a practice commute with new costs.
Training goal: Reduce exposure without a rushed purchase
▶ Play this trainingSituation
1. Practice commuting costs rise from $100 to $140 a month. Income stays unchanged.
- Account for the extra $40
- Increase the whole budget by 40%
- Ignore the gap until month end
2. Another route costs $90 but adds an hour a day. Flexible hours allow cheaper travel without the extra hour on two days each week.
- Choose $90 on price alone
- Buy a new vehicle immediately
- Trial the flexible schedule
3. In the practice calculation, a new vehicle costs $1200 and saves $20 monthly. Other costs are not yet included.
- Treat any price rise as a reason to buy
- First calculate at least 60 months
- Assume a 12-month payback
4. The trial schedule works. Prices may rise or fall.
- Keep flexibility and a review date
- Sign an expensive long contract out of fear
- Stop reviewing the budget permanently
What you will learn
- One price shock is not every price rising
- Time savings also have value
- Flexible plans can be revised
Your real-life step
Find an alternative for one recurring expense and check its full cost.
Questions and answers
When did this oil shock begin?
In 1973. Its effects continued into 1974.
How do I calculate simple payback?
Divide initial cost by net savings per period. This omits some risks and the time value of money.
Is the cheapest route best?
Not necessarily. Include time, safety, reliability and your actual need.
More trainings in this module
- A flower with no buyer
- Promises outrun ships
- Useful rails, uncertain returns
- New coins, waiting customers
- Closed doors, existing balances
- Bigger pay, a smaller basket
Numbers are illustrative. A game, not financial advice.