Steps to Solve Personal Financial Challenges

Question:

There are four steps in solving one’s personal financial challenges:

1. Considering opportunity costs

2. Assessing risks and returns

3. Setting short- and long-term goals

4. Assessing needs and wants

Which 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:

The correct order of the steps in solving one’s financial challenges is:

C. 4, 1, 2, 3

Explanation:

Assessing needs and wants (4) – Start by understanding what you need versus what you want, as this provides the foundation for financial planning.

Considering opportunity costs (1) – Evaluate the trade-offs of different financial decisions.

Assessing risks and returns (2) – Analyze the potential risks and returns associated with various financial choices.

Setting short- and long-term goals (3) – Finally, define your financial objectives based on the previous assessments.