Values and Money
What are the four main values that can influence our financial decisions
What are inner, social, physical, and financial
This field combines economics and psychology to study why people behave the way they do in the real world
What is behavioral economics
You buy something you don't really need because everyone on social media has it and you don't want to feel left out
What is FOMO
This is often the first step toward overcoming the influence of a cognitive bias
What is awareness
This bias refers to your tendency to gravitate toward people who are similar to you or who share the same qualities
What is affinity bias
This life value focuses on our personal identity (how we see ourselves) and our social identity (how we believe others see us)
What are inner values
This is an error in the way we think that can influence our decisions
What is a cognitive bias
You keep eating an expensive restaurant meal even though you're full because you've already paid for it
What is sunk cost fallacy
Before making a financial decision, doing this can help you understand why you're so eager to make the choice
What is taking time to reflect
This bias happens when you change your views or beliefs to match the opinions of others
What is Conformity bias
Family, friends, and community members can influence your feelings about money through this type of value
What are social values
Cognitive biases exist partly because our brains use them as ____ ______ to process information more quickly
What are mental shortcuts
You want a certain car, so when researching it, you pay attention mainly to information supporting the choice you already want to make
What is confirmation bias
Asking people outside your normal friend group for their opinions can help because it exposes you to these
What are different perspectives
This bias is your tendency to give more credibility to someone who holds a position of authority or power
Authority bias
This life value focuses on the tangible aspects of life, the external world, and our physical health and well-being
What are physical values
Cognitive biases help our brains make decisions efficiently, but they can also create this problem
What are systematic errors in thinking / irrational decisions
You believe your ability to pick winning investments is much better than it actually is
What is overconfidence
This concept causes you to pause long enough to ask good questions, which stops you from making assumptions that you’re always right
What is being curious
This bias is when you tend to prioritize the input of other people in the room or those who are physically close to you over the thoughts of those who are farther away
What is distance bias
Naresh automatically deposits part of each paycheck into savings. This life value BEST explains his regular saving habit
What are financial values
Cognitive biases often rely on these three things rather than actual facts
What are perceptions, observations, and experiences
Your friends are all excited about a new investment app, so you decide to use it without doing your own research
What is herd mentality
People with a ___ mindset tend to learn from criticism and believe they can develop improved cognitive abilities
What is Growth
This bias is when you judge someone positively or negatively based on nonverbal cues, such as posture or body language
What is nonverbal bias