Personal Finance - Chapter 1

Refers to all the money decisions a person or family must make in order to earn, budget, save, and spend money over time. These choices involve planning for emergencies and for the future.

• Financial aid

• Personal finance

• Home finance

• Cash flow statement

Personal finance is about _______% behavior and _______% head knowledge.

• 30, 70

• 20, 80

• 70, 20

• 80, 20

A measurement of the total dollar value of a person’s or business’ assets minus liabilities is called:

• Net worth

• Wealth

• Earnings

• Income

A liability can be described as:

• Something you own that has value

• Money you owe; a debt

• Something that goes down in value over time

• Money that you have in a savings account

The First Foundation is:

• Get out of debt

• Pay cash for a car

• Save a $500 emergency fund

• Build wealth and give

It is impossible to save money when you have a small income.

• True

• False

Which of the following would be a good reason to use money out of your emergency fund?

• I need a vacation at the beach.

• The jeans that I really want are on sale this week, but I don’t have enough money on hand to get them.

• The transmission went out in my car.

• My friend needs to borrow money from me so that she can go the concert with us this weekend.

Which of the following allows invested money to grow over time?

• Interest

• Premium payments

• Taxes

• Inflation

The condition of having unlimited wants but limited resources is known as:

• Consumerism

• Scarcity

• Global demand

• Budgeting

A plan for spending is called a(n):

• Checking account

• Economy

• Scarcity

• Budget