Personal Finance Final Exam

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Juan saved $1,000 from his summer job cleaning pools. Which of these account types would work best for him if he doesn't need access to the money for a number of years AND wants to earn the highest interest rate? Regular savings account, Money Market account, Checking account, Certificate of Deposit

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Certificate of Deposit

Front

Which of the following is an effective strategy for personal saving?
- Wait until the end of the month and save whatever is left in your checking account
- Save a certain percentage of each paycheck and deposit it directly into a savings account
- Cover all of your wants and needs and save whatever is left over
- Take out a payday loan so you can save before you receive your paycheck

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Save a certain percentage of each paycheck and deposit it directly into a savings account

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How long will it take Joelle to build her emergency fund to cover 6 months of expenses if she saves 10% of her $4,000 monthly gross pay and her monthly expenses are $2,000?

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30 months

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All of the following statements about bank accounts are true EXCEPT: 1. If the bank is FDIC-insured, your money, up to the FDIC limit, is safe even if the bank fails. 2. Many banks pay interest on the money you deposit into your savings account. 3. Historically, savings accounts earn higher returns than investments in the stock market. 4. Money in a checking account is usually easy to access via ATM, debit card or check.

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Historically, savings accounts earn higher returns than investments in the stock market.

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All of the following are true about prepaid cards EXCEPT…
1. Prepaid cards typically include a lot of fees
2. Prepaid cards are a useful option for someone who is unbanked to make online purchases
3. Prepaid cards are a great way to build credit
4. Prepaid cards are usually accepted anywhere that debit and credit cards are accepted

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Prepaid cards are a great way to build credit

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You are developing a savings plan and using short-, medium-, and long-term goals to motivate you. Which represents possible goals from short-term to long-term? Save for… A new cell phone, college tuition, a house down payment

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A new cell phone, college tuition, a house down payment

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If you follow the 50-30-20 rule of budgeting, you'll be putting 50% of your monthly income toward _______________, 30% of your monthly income toward _____________, and 20% of your monthly income toward ______________.

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Needs, wants, savings

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Which represents the BEST time to start saving for your retirement? Options: As soon as you have your first full-time job, Right after you pay off your student loans, Once you are debt-free, including paying off all credit cards, auto loans, and your mortgage, At age 45, so you have exactly 20 years until retirement

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As soon as you have your first full-time job

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Which of the following statements is TRUE? The majority of Americans have an adequate emergency fund, sufficient amounts of money saved for retirement, have an adequate emergency fund but do NOT have sufficient amounts of money saved for retirement, or do NOT have an adequate emergency fund or sufficient amounts of money saved for retirement?

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The majority of Americans do NOT have an adequate emergency fund or sufficient amounts of money saved for retirement.

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Experts recommend that you accumulate enough to cover 3 to 6 __________________ of expenses in your emergency fund.

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Months