Foundations in Personal Finance Unit 1

Which of the following statements best describes how Americans are being outsmarted by banks and other lenders?

• Credit is marketed so well that we desire to have it while completely dismissing the fact that interest rates and fees continue to destroy our financial well-being

• We are taught that we can buy happiness

• Buying things on credit has become acceptable in our culture

• We are driven by consumerism

Having debt keeps you from building wealth.

• True

• False

Which of the following statements best explains why income alone does not determine wealth?

• Investing is the only factor that contributes to wealth planning

• Income alone does determine a person's wealth

• Only people who are natural savers can become wealthy

• How much money a person makes does not dictate his or her spending and saving behavior

When developing a personal financial plan, one of the first things you should do is assess your current financial situation. This includes your income, assets, and liabilities.

• True

• False

Which of the following is not a true statement?

• Americans learned to borrow amidst post-WWII prosperity

• The credit industry in America has not changed much since 1917.

• After 1970, consumer debt skyrocketed

• As banks made higher profits, they were willing to lend more money to consumers

Which of the following is not a benefit of understanding your own money personality?

• Recognizing who you are allows you the opportunity to grow and learn

• Once you know your money personality, you can develop a financial plan that works for your

• Knowing your money personality allows you to excuse excessive spending because it is simply part of your nature

• None of the above

Key components of financial planning include all of the following except:

• Write out a detailed plan for accomplishing your goals

• Replace money myths with money truths

• Allow your financial planner to make all of your major money decisions

• Regularly monitor and reassess your financial plan

During the Great Depression, New Deal policymakers came up with mortgage (home loans) and consumer lending policies that convinced commercial banks that:

• Consumers would not be willing to use credit, since borrowing money for large purchases had not previously been a n option fo the middle class

• They would not be able to compete with loan sharks in the industry of consumer lending

• Consumer credit could be profitable

• Consumer credit was not a profitable industry

Most Americans today are wealthy and will have financial security when they retire.

• True

• False

When it comes to managing money, success is about ___% knowledge and ____% behavior.

• 50, 50

• 60, 40

• 80, 20

• 20, 80