Cognitive Biases
A systematic error in thinking that affects how people process information and make decisions.
What is Cognitive Bias?
Can lead to poor timing, overspending, or chasing trends without research
What is FOMO (Fear of Missing Out)?
"I don't need a budget, I've got this!"
What is Overconfidence?
A numerical summary of your creditworthiness based on the information in your report
What is a Credit Score?
(Typically ranging from 300 to 850 for FICO and VantageScore models)
an unplanned, spur of the moment purchase driving by sudden emotion or desire, rather than logic or need.
What is Impulsive Buying?
(Often triggered by appealing displays, advertising, or moods like happiness or boredom.)
Making decisions about a current situation based on what resources you have already invested in a situation.
Hint: "I've already spent so much, I can't quit now!"
What is Sunk Cost Fallacy?
Skews decisions, especially in shipping or investing
What is Anchoring?
"Everyone's buying crypto, I should too!"
What is Herd Mentality?
A detailed record of your credit history, including loans, credit cards, and payment history
What is a Credit Report?
The tendency for a person's spending to increase along with their rising income (promotion, new job, or bonus)
What is Lifestyle Inflation?
Regarding losses as considerably more important than gains of comparable magnitude.
What is Loss Aversion?
Can lead to fear-based choices, like avoiding online banking after hearing about fraud
What is Availability Heuristic?
Avoiding change to prevent loss, even when it's logical
What is Loss Aversion?
The most impactful factors make up 35% and 30%
What is Credit History and Credit Utilization Ratio?
(Credit use or amount of credit use can be used for credit utilization)
What is the 50/30/20 rule?
(50% for needs, 30% for wants, 20% for savings and debt)
Returning to a baseline level of happiness regardless of whether you go through a positive or negative experience or event
What is Hedonic Adaptation?
Limits growth and keeps poor habits in place
What is Confirmation Bias?
Getting used to new luxuries and overvaluing something because you own it
What is Endowment Effect?
Stays on your credit report for up to 2 years. It can temporarily decrease your credit score
What are Hard Inquiries?
The primary goal is to grow wealth over time
What is Investing?
Putting more value on things you already own
What is Endowment Effect
Makes it harder to feel satisfied, leading to lifestyle inflation and less saving
What is Hedonic Adaptation?
Clinging to the first price you saw
Financial passport to navigate financially through adulthood
What is a Credit Score?
Reasons why credit unions are better than banks
Fewer and lower fees for checking accounts, overdrafts, and wire transfers. Better interest rates on savings, money market, and certificate accounts. Lower interest rates on loans and credit cards. Personalized service (member-centric philosophy). Community focused. Member-owned. Insured by NCUA up to $250,000 per account holder.