Every day we face financial choices, which require making decisions concerning how much to spend on goods and services, how much to save, etc These decisions are particularly difficult for students, as, in most cases, they do not have a stable income and have to rely on their parents’ income or a loan. Additionally, even as an economics student, you do not get to use your expertise and knowledge to support your decisions because of various constraints, such as lack of time, lack of information, and many others.
In such situations, most people tend to employ some commonly adopted principles, which allow them to reduce the effort and time invested in making the decision and to simplify it. These principles are known as rules of thumb. In the following, several examples of rules of thumb are analysed and discussed in more detail.
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