Principles of Financial Planning

Personal finance skills have the most significant impact on an individual’s

• Career

• Quality of life

• Education

• Number of dependents

Which best describes what financial planning skills ultimately enable an individual to do?

• to prepare for the future

• to determine lifetime income

• to determine the cost of living

• to learn from the past

There are four steps in solving one’s personal financial challenges. Mark all that apply.

• assessing needs and wants

• considering opportunity costs

• assessing risks and returns

• setting short- and long-term goals

In personal finance, one makes decisions based on needs vs. wants. What is considered a need?

• something one would like to have

• something ones does not need to budget for

• something one can afford

• something one cannot live without

How do short-term goals differ from long-term goals?

• Short-term goals involve more planning than long-term goals.

• Short-term goals are more affordable than long-term goals.

• Short-term goals cost more than long-term goals in the long run.

• Short-term goals are more immediate than long-term goals.

Planning to finance higher education helps people prepare for their financial future because it teaches them about

• funds management and loans.

• their educational options.

• the real world.

• meeting short-term goals.

How do long-term goals differ from short-term goals?

• Long-term goals require more planning than short-term goals do.

• Long-term goals require more money than short-term goals do

• Long-term goals involve less planning than short-term goals do.

Which results are more likely for someone without personal finance skills? Select three options.

• larger long-term credit or loan costs

• less preparation for emergencies

• increased long-term challenges

• I have no idea!

A________________is a plan in which an individual balances available resources and expenses.

• Budget

• money earned

• the chance or possibility of loss

• I need to attend office hours

What are the main purposes of a budget? Select three options.

• to record past income and spending

• to plan future income and spending

• to balance available resources and expenses

• I am not sure