Behavioral Finance

Needs and wants are important to distinguish so that we can prioritize our money. The key word that separates these two things is that needs are _________, where as wants are just items we would like to have.

• Essential

• Subjective

Which should we spend our money on FIRST?

• Needs

• Wants

Think back to your personal values assessment. Your top 5 values...

• Are the most valuable items to me

• Are internal principles that help guide my decision making

• Are not important when it comes to money

• Are 5 traits of my personality

Your values affect the way that you use money because...

• You will ONLY spend money on what's important if you have values

• It tells you how much something is worth

• Your decisions will reflect the values that you hold as important

SMART goals are helpful to organize your goals into an action plan. The benefits of setting quality goals, especially that involve money planning, are:

• Prepares us for a bright future

• Helps us improve ourselves, keeps us on track

• Allows us to work towards the things we really want to accomplish

• All of the above

The PACED decision making model is an organized way to think about your problem, your options, how those align with your values, and what you opportunity cost would be to help you make a good decision. Why is it important to have good decision making skills?

• To help you stay on track with your goals

• Because good decisions are a domino effect, it can cause other good things

• All of these are correct

• So that you can be wise with your time and money

A short term goal is...

• One that requires no planning or effort

• Not important

• One that can be accomplished in a short amount of time/in the near future (day, week, month)

A long term goal...

• Only matters later in life

• Usually requires more planning, takes a long time to accomplish and work toward

• Can be the same as a short term goal

Which type of decision requires little planning/thought and is one that you make on a regular basis?

• Routine decision

• Major Decision

Which type of decision requires thought, planning, and usually more of our monetary resources? This type of decision usually has a greater risk/consequences.

• Routine decision

• Major decision