Economic Thinking
The value of the next best alternative you give up when you make a choice.
What is opportunity cost?
The zero-based method and the 50/30/20 rule are examples of this.
are examples of this.What is budgeting?
Payment history, credit utilization, and length of credit history all affect this.
What is your credit score?
A decision-making tool that uses weighted criteria to compare options.
What is a decision-making matrix?
Starting this financial habit early gives your money more time to grow.
What is saving or investing?
A situation where you must choose between going out with friends or studying for an exam.
What is a tradeoff?
A monthly rent payment is this type of expense, while groceries vary and are considered this.
What are fixed and variable expenses?
This acronym stands for the yearly cost of borrowing money, including interest and fees.
What is APR (Annual Percentage Rate)?
Listing advantages and disadvantages is part of this decision tool.
What is a pros and cons list?
Interest that earns interest on itself over time.
What is compound interest?
A basic economic problem of having limited resources and unlimited wants.
resources and unlimited wants.What is scarcity?
A savings category designed for unexpected events like car repairs or medical bills.
What is an emergency fund?
Debt that helps you build assets or improve future income is called this.
What is good debt?
Feelings and emotional responses that can cloud rational financial decisions.
What are emotional biases?
One reduces your taxable income, the other reduces the tax you owe.
What are tax deductions and tax credits?
A tool that compares benefits and costs to evaluate choices.
What is a cost-benefit analysis?
This budgeting rule allocates 50% to needs, 30% to wants, and 20% to savings/debt.
What is the 50/30/20 rule?
Paying your full balance on time every month helps you avoid this.
What is credit card debt (or interest)?
The mistake of continuing to invest in a decision because you've already spent resources on it.
What is the sunk cost fallacy?
This tax form reports your yearly wages and tax withholdings.
What is a W-2 form?
A way of thinking that uses logic and tradeoffs to make better financial decisions.
What is economic thinking?
A financial habit that helps identify overspending and improve money awareness.
What is expense tracking?
The percentage of your available credit you are currently using.
What is the credit utilization ratio?
Buying something on impulse rather than comparing prices and thinking it through logically.
What is an example of impulse spending
A no-cost option to prepare and file your federal taxes online.
federal taxes online.What is IRS Free File (or TurboTax Free Edition, etc.)?