2. Your friend wishes to begin saving, but he finds he continually spends the amount he...

2. Your friend wishes to begin saving, but he finds he continually spends the amount he plans to save each month on impulse purchases.

a. Would you say your friend is being rational? Why or why not?

b. Is there any plan you could suggest to your friend to help him adjust his behaviour to better meet his goals?

Expert Solution

Your friend wishes to begin saving, but he finds he continually spends the amount he plans to save each month on impulse purchases.

a. Would you say your friend is being rational? Why or why not?

Answer NO i would not say he is being ratioonal becuase rational is when he save the spending for the goal he want to get .He is saving his money for meeting a goal and having a continous impulse purchase will not make him to get to his goal so he is not being rational otherwise .

b. Is there any plan you could suggest to your friend to help him adjust his behaviour to better meet his goals?

Answer I would suggest him to invest his saving on the mutual find which give high interest rate for reaching its goal .In diect growth policy of mutual fund he can invest his little saving and he can withdraw anytime after the year for whatever he need to buy .This will not only save his money from impulse pirchase but will also make his behavior to change in investing his money on prop0er direction

HAVE A GOOD DAY !

Rahul Sunny answered 7 months ago

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