Mini-Activity Idea: How To Avoid Financial Pitfalls
A great article from Of Dollars and Data that highlights six of the "tried and true" methods that make us susceptible to financial trickery or just plain bad decisions. On the subject of trickery, be sure to check out NGPF's release of SIX NEW Financial Pitfalls Projects that will increase your student's savviness.
So what are the six ways of influence described in the article (with the tag lines he provides):
- Authority: Trust me I'm an expert.
- Commitment and consistency: Just say yes.
- Social proof: Everyone else is doing it.
- Reciprocity: An eye for an eye.
- Liking: You like me. You really, really like me.
- Scarcity: While supplies last.
Here's a mini-activity idea so students can apply what they learned in this article. Have them do a Webquest on one or more of these financial phenomena and describe which of the six influence methods are/were at work (they likely use more than one):
- Buying items that you see your friends with on your social media feed (Instagram, etc.)
- Signing up for overdraft protection
- Buying a car at a car dealership
- Attending an expensive college that you may not be able to afford
- Bernie Madoff scandal
- Attending an investment seminar where an excellent meal is served
- Housing bubble in early 2000s
- Internet stock craze around year 2000
For more Financial Pitfalls resources, check out this resource page on our website.
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
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