Behavioral Economics
What does FOMO stand for?
Fear-of-Missing-Out
True or False: When you deposit your money at a community or online bank, your money is insured by the FDIC up to $250,000.
True
How much of your paycheck are you recommended to save?
20%
The details of any loan will include the following 3 components:
The principal, the interest rate, and the loan term
Briefly describe the purpose of taxes.
Payments made by citizens to fund government organizations
What are the top 3 biggest cognitive biases?
Confirmation, Hindsight, Anchoring biases
Why is it important to review your bank statement each month?
To ensure nothing is out of the ordinary
Which strategy will help you save the most money?
As soon as you receive your paycheck, put a fixed amount or percentage of your money directly into your savings.
Why are secured loans considered less risky to the lender?
Lenders can check your credit score before giving a secured loan, which they can't do for an unsecured loan
Medicare and Social Security are mandatory spending categories funded by which type of taxes that are withheld from your paycheck?
Federal
If cognitive biases can cause us to make irrational decisions, why do they exist?
Because they function as fast mental shortcuts
What is an overdraft fee?
A fee for making a transaction while lacking sufficient funds
How can you counteract the impact of inflation?
By planning your saving goals accordingly
Having a good credit score, making a larger down payment, and finding a cosigner with good credit are all ways to…
Decrease your principal
You will need to include all of the following information on a W-4 form EXCEPT…
Earned income from previous job
What percentage of people make purchases due to FOMO?
60% of people
True or False: Overdraft protection is a required feature of most checking accounts with no ability to opt out.
False
What are the advantages of using a digital wallet over a physical credit card?
Security and convenience
Each of these statements describes a variable rate loan EXCEPT...
Can increase or decrease the interest rate over the course of the loan
TRUE or FALSE: Only U.S. citizens can be claimed as a dependent for tax purposes.
False
Why do you think awareness of cognitive biases is the first step to overcoming them?
By becoming aware of them, you can make an effort to work on consciously avoiding them
What are the main differences between a checking and savings account?
Checking accounts are where you put your money if you need easy access to it
Savings accounts are essentially tools for investing
Name one benefit of using direct deposit.
Early pay
no holds
immediate funds
no bank trips
always readily available
split deposits
Why is it more difficult to get out of debt when only paying the minimum payment?
Because each payment goes toward high interest charges rather than reducing the actual amount you borrowed
When should you receive your W-2 form from your employer?
Jan. 31