Personal Finance Final Review

Which of the following actions is the BEST way to counteract loss aversion when making a decision?

• Dwelling on the potential loss you may experience for several days

• Making the choice that takes on the most risk possible

• Reframing the decision to focus on the potential gains instead of the potential losses

• Polling a bunch of your friends and family to see what they would decide

People who experience FOMO may...

• Save a percentage of their paycheck each month

• Donate money to a cause they care about

• Go into debt to keep up with everyone else

• Create and stick to a monthly budget

When using social media, it's important to remember that...

• Social media ads are trying to get you to buy stuff you NEED, not want

• People typically only post about the best parts of their lives on social media

• Marketers have your best interests in mind and want you to be financially responsible

• The more likes a post has, the more trustworthy and accurate the information is likely to be

Which of the following best describes what a cognitive bias is?

• A rational decision that is based on research and facts

• The belief that a person should change their opinions when new facts arise

• The belief that we are right until someone provides information that contradicts our belief

• An error in the way we think that can influence our decisions

Explain why it can be difficult to ignore sunk costs when making a decision.

Evaluate responses using AI:

OFF

Explain how an awareness of your values and cognitive biases may help you make better decisions.

Evaluate responses using AI:

OFF

What role does social media play in creating FOMO?

Evaluate responses using AI:

OFF

Which represents the BEST time to start saving for your retirement?

• Right after you pay off your student loans

• Once you are debt-free, including paying off all credit cards, auto loans, and your mortgage

• At age 45, so you have exactly 20 years until retirement

• As soon as possible

If you follow the 50-30-20 rule of budgeting, you'll be putting 50% of your monthly income toward _______________, 30% of your monthly income toward _____________, and 20% of your monthly income toward ______________.

• Needs, wants, savings

• Savings, needs, wants

• Needs, savings, wants

• Wants, needs, savings

Which of the following is an effective strategy for personal savings?

• Wait until the end of the month and save whatever is left in your checking account

• Save a certain percentage of each paycheck and deposit it directly into a savings account

• Cover all of your wants and save whatever is left

• Take out a payday loan so you can save before you receive your paycheck