SS8E3 Personal Finance Study Guide 146883

When an individual takes money they could have spent but instead puts it into a bank or investment account is the benefit of which of the following?

• decreased debt

• savings

• interest

• low credit score

The most important factor when first developing a financial plan should be the money received for your labor or services, the sale of property or goods, from financial investments, or other services. Which of the following is being described as the identified factor?

• credit

• interest

• debt

• income

Look at the characteristics:

- encourages an individual to save so that long-term goals can be achieved.

-Prepare for changes in financial circumstances, like loss of a job.

-Awareness of where money is spent and to identify unnecessary expenditures.

Which of the following would be the MOST accurate title for the table?

• consumer rights

• benefits to good credit

• uses of income to debt ratio

• benefits of a household budge

Purchasing a mortgage, advancing education or starting or expanding a business are considered acceptable uses of which of the following? Choose the BEST two.

• credit

• interest

• debt

• creating a budget

Debt allows for the delayed payment for goods and or services and comes with an additional amount of money. What is the term for the additional amount of money you pay to use borrowed money?

• credit

• interest

• debt

• income

Which of the following is the BEST definition of credit?

• income you do not earn

• money loaned to a person that must be paid back along with additional interest.

• a legal proceeding involving a person or business that is unable to repay outstanding debt.

• money borrowed by one party from another

Look at the characteristics:

- uncontrolled and outstanding debt

- unable to pay creditors

- income to debt ratio is high

- low personal savings

Which of the following is being identified in the box?

• benefits of debt

• common reasons for bankruptcy

• reasons to use debt

• common benefits of credit

After income and expenses, which of the following is the MOST important part of a budget and why is it important?

• Investments because it is the only definite way to become wealthy.

• Savings because it is the only protection against frivolous spending.

• Savings because it provides financial security and is useful in an emergency.

• Investments because in order to have e retirement, people need to invest at least half their earnings.

A borrower acknowledges they cannot pay their creditors and files for legal protection. Which of the following does the United States government provide to protect borrowers?

• bankruptcy

• credit counseling

• savings account

• tax returns

Read the following scenario:

A family wants to purchase a $232.00 home

The family income or savings does not cover the total amount.

The family borrows the money needed from a bank.

The family purchases the home with bank loan.

Which of the following is a financial effect of the scenario? Choose the BEST TWO.

• having no savings account options

• low interest rates on future purchases

• debt on home purchase

• credit score is now lower

• recurring loan payments to bank