Give every dollar the same value: mental accounting explained: test your skills
A refund, a bonus and a paycheck are all just money. Treating “found” money as play money is a costly habit. Answer each question to see the explanation; your score appears at the end.
This test checks that you can
- Recognise mental accounting
- Use buckets deliberately
- Apply the paycheck test to windfalls
- Practice
1. Mental accounting is…
- Practice
2. Is every mental bucket bad?
- Practice
3. Best use of a refund while carrying a 24% card balance?
- Key idea
4. Which statement best explains "A dollar is a dollar"?
- Key idea
5. Which statement best explains "Buckets can help"?
- Key idea
6. Which statement best explains "Windfalls deserve a plan"?
- Action plan
7. In the action plan, which step comes first?
- Mistake to avoid
8. Which of these is a mistake this lesson warns against?
- Mistake to avoid
9. Which of these is a mistake this lesson warns against?
You keep $3,000 in savings at 1% and owe $3,000 on a card at 22%. Roughly how much does the gap cost per year?
Show the answer
About $630
Card interest $660 − savings interest $30 = $630 (simplified, keeping a separate emergency fund).
Decide now how you will split your next tax refund or bonus.