Behavioral Economics & Banking

Which of the following situations BEST illustrates the concept of FOMO (Fear of Missing Out)?

• Lisa signs up for a yoga retreat after hearing her colleagues talk about it

• Tom shares daily updates from his road trip across the country on social media

• Emily buys a new smartphone after seeing an online advertisement

• Carlos feels the urge to attend a concert because all his friends are going and talking about it

What is a recommended approach to building a personal savings habit?

• Spend first and save whatever is left at the end of the month

• Automatically transfer a fixed percentage of your income to a savings account

• Fulfill all your desires and save the remaining amount

• Borrow money to save before your paycheck arrives

Experts suggest maintaining an emergency fund that can cover __________________ months of expenses.

• 2-3

• 4-7

• 1-3

• 3-6

All of the following statements about bank accounts are false EXCEPT…

• If the bank is FDIC-insured, your money, up to the FDIC limit, is at risk if the bank fails

• Many banks do not pay interest on the money you deposit into your savings account

• Historically, savings accounts earn lower returns than investing your money

• Money in a checking account is usually difficult to access via ATM, debit card or check

Which of the following statements about prepaid cards is NOT true?

• Prepaid cards often come with various fees

• Prepaid cards can be a convenient option for those without a bank account to shop online

• Prepaid cards are an excellent tool for establishing credit history

• Prepaid cards are generally accepted wherever debit and credit cards are used

When planning your financial future, you need to set savings goals for different time frames. Which sequence correctly represents these goals from immediate to long-term? Save for…

• A new smartphone, a family vacation, retirement

• A weekend trip, a new bicycle, buying a house

• A concert ticket, a new laptop, a child's education

• A new outfit, a vacation, a new car

According to the 50-30-20 budgeting rule, what are the 3 categories of budgeting?

• Wants, Wishes, Needs

• Retirmenent, Savings, College Plans

• Needs, Wants, Savings

• Wishes, 401k, Savings

When is the most advantageous time to begin planning for your retirement savings?

• Immediately after securing your first full-time employment

• Once your student loans are completely paid off

• After eliminating all forms of debt, including credit cards, car loans, and your home mortgage

• At the age of 45, allowing for a 20-year savings period before retirement

What is the financial situation of most Americans regarding emergency funds and retirement savings?

• Most Americans have both an adequate emergency fund and sufficient retirement savings

• Most Americans have an adequate emergency fund but lack sufficient retirement savings

• Most Americans lack both an adequate emergency fund and sufficient retirement savings

• Most Americans have sufficient retirement savings but lack an adequate emergency fund

What is a cognitive bias?

• A logical conclusion drawn from evidence

• A tendency to make decisions based on personal beliefs rather than facts

• A method of revising opinions when presented with new information

• A systematic error in thinking that affects judgments and decisions