personal finance

authority bias

is the tendency to attribute greater accuracy or value to the opinions of an authority figure, affecting decision-making and financial choices.

behavioral economics

is the study of how psychological factors influence economic decision-making, often revealing irrational behaviors and biases that impact individual financial choices.

• Confirmation Bias

is the tendency to search for, interpret, and remember information in a way that confirms one's preexisting beliefs or values, leading to skewed financial decisions.

data breach

is a security incident where unauthorized access to sensitive data occurs, potentially leading to financial loss and identity theft.

endowment effect

is a behavioral phenomenon where people assign greater value to items they own compared to equivalent items they do not own, affecting financial decisions.

FOMO

is the fear of missing out, which compels individuals to make impulsive financial decisions to avoid being left out of experiences or opportunities.

Hedonic adaptation

is the psychological phenomenon where individuals quickly return to a baseline level of happiness after experiencing positive or negative events, influencing spending and satisfaction with financial choices.

herd mentality

is a behavioral tendency where individuals conform to the decisions or behaviors of a larger group, often leading to impulsive financial choices without independent evaluation.

identity theft

is the unauthorized acquisition and use of someone's personal information for fraudulent purposes, often resulting in financial loss and damage to one’s credit.

loss aversion

is a behavioral economic concept where individuals prefer to avoid losses rather than acquiring equivalent gains, meaning the pain of losing is psychologically more impactful than the pleasure of gaining.

multi level marketing company

is a business model that relies on a network of distributors to sell products and recruit new members, often characterized by selling products directly to consumers and incentivizing participants to earn commissions based on their sales and the sales of their recruits.

overconfidence bias

is a cognitive bias where an individual's subjective confidence in their judgments is greater than the objective accuracy of those judgments, often leading to poor financial decisions.

overnight test

is a method used to evaluate the effectiveness or performance of a financial product or investment by assessing its results over a short period, typically involving a one-night evaluation of returns or volatility.

overprecision

is an excessive level of confidence in the accuracy of one's knowledge or beliefs, often resulting in an underestimation of uncertainty and potential risks in financial decision-making.

phishing scam

is a fraudulent attempt to obtain sensitive information, such as account details or personal identification, by disguising as a trustworthy entity in electronic communications, commonly through email or websites.

pyramid scheme

is a business model that recruits members via a promise of payments or services, wherein returns are primarily derived from new participants' contributions rather than legitimate business activities.

scam

is a deceptive scheme intended to con people into giving up their money or personal information, often by misleading them about the nature of a product or service.

social media marketing

involves promoting products or services through social media platforms to engage with a target audience and drive sales.

sunk cost fallacy

is the tendency for individuals to continue investing in a losing proposition due to the cumulative prior investment, despite new evidence suggesting that it might be better to abandon the endeavor.

2 FA

(Two-Factor Authentication) is a security process that requires two forms of verification to access an account, enhancing protection against unauthorized access.

cognitive bias

is a systematic pattern of deviation from norm or rationality in judgment, leading to illogical conclusions and decisions.

why might people fall for a scam

Some individuals may fall for a scam due to cognitive biases, emotional appeals, or a lack of awareness about common warning signs, leading them to make irrational decisions.

how can you protect your identity

To protect your identity, regularly monitor your financial accounts, use strong and unique passwords, enable two-factor authentication, and shred personal documents to prevent unauthorized access.

how can social media influence you to spend money

Social media can influence spending by creating a culture of comparison, promoting targeted advertisements, and leveraging social proof, which can lead to impulsive purchasing decisions.