Cognitive Biases
What is FOMO?
In the 50/30/20 budget, this makes up 50%.
What is your needs?
This type of card lets you borrow money up to a limit and pay it back over time.
What is a credit card?
The length of time is the main difference between these two types of financial strategies.
What is investing and trading?
This is what you pay every month in order to be covered by your insurance policy.
What is a premium or a monthly premium?
When you make decisions based on what the majority is doing.
What is Herd Mentality?
In a zero-based budget, your income minus expenses should equal this.
What is zero?
This is the amount of time you agree to repay money you borrowed.
What is term length?
You are a partial owner in a company when you buy these.
What are shares of stock?
This is what you must pay before your insurance will honor a claim.
What is a deductible?
When something looks like it won't work out but you continue to invest time, money, and/or resources into it.
What is the Sunk Cost Fallacy?
This is the main purpose of a checking account.
What are daily transactions and bill payments?
This is what the amount of money you borrowed is called.
What is the principal?
True or false, can you guarantee the returns on your financial investment?
What is false?
If your auto insurance has a $500 deductible and you are in an accident with $2000 in damages, how much will you have to pay?
What is $500?
This is when you seek out information that supports your existing beliefs while ignoring contradicting evidence.
What is Confirmation Bias?
This type of account typically offers higher interest rates.
What is a savings account?
This three-digit number, typically ranging from 300 to 850, represents a person's creditworthiness to lenders.
What is a credit score?
It is important to have a mix of assets when investing to help minimize risk. This is known as what?
What is diversification?
This type of insurance covers you financially if you are at fault for causing an accident.
What is liability insurance?
Psychologists describe this cognitive bias as people valuing things they own more highly than identical items they don't own.
What is the Endowment Effect?
Sometimes known as the 8th wonder of the world, this type of interest allows you to earn interest on your interest and grow your wealth exponentially.
What is compound interest?
Paying only this amount each month, rather than the full balance, causes interest to accumulate on the remaining debt.
What is a minimum payment?
Saving for retirement is tricky. You must account for the increasing costs of goods and services. These rising prices (often 2-3% per year) is known as?
What is inflation?
This is a fixed amount that you pay for each doctor visit.
What is a co-pay?
This bias is when people react more to losing something than gaining something of equal value.
What is loss aversion?
What type of account 'locks' your money in it for a set period of time, but often earns the highest rate of interest.
What is a Certificate of Deposit (CD)?
This is the percentage of your available credit that you're currently using; experts generally recommend keeping it below 30%
What is credit utilization?
This is a payment some companies make to shareholders, usually quarterly, as a way of sharing their profits. It is one of two ways you can make money as a stock owner.
What is a dividend?
This is the term for what your insurance company is estimated to pay, based on the metal designation of your plan.
What is actuarial value?