Question

There are four steps in solving one’s personal financial challenges:1. considering opportunity costs2. assessing risks and returns3. setting short- and long-term goals4. assessing needs and wantswhich of these is the correct order of these steps? a) 2, 1, 3, 4 b)1, 2, 3, 4 c) 4, 1, 2, 3 d) 4, 2, 3, 1

Answer 1

The correct order of the four steps in solving personal financial challenges is option 1, 2, 3, 4: considering opportunity costs, assessing risks and returns, setting short- and long-term goals, and assessing needs and wants.

Step-by-step explanation:

The correct order of the four steps in solving personal financial challenges is option b) 1, 2, 3, 4. Here's a breakdown of each step:

1. Considering opportunity costs: This involves thinking about the potential benefits or opportunities that may be lost when making a financial decision. For example, choosing to spend money on a new gadget may mean sacrificing the opportunity to save for a future goal.
2. Assessing risks and returns: This step involves evaluating the potential risks and rewards of different financial choices. It's important to consider the potential gains as well as the potential losses before making a decision.
3. Setting short- and long-term goals: This step involves identifying specific financial objectives that you want to achieve in the short-term (e.g., saving for a vacation) and the long-term (e.g., saving for retirement).
4. Assessing needs and wants: This step involves distinguishing between essential needs (e.g., food, shelter, healthcare) and non-essential wants (e.g., luxury items, entertainment) when making financial decisions.