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.

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

What role does social media play in creating FOMO?

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