Financial Literacy Final Review

What does the SMART goals acronym stand for?

• Specific, measurable, attainable, relevant, and time bound

• Short, money, awesome, real, and true

• Specific, money related, actual, real, and timely

What is meant by a person’s average propensity to consume?

• Refers to the part of your income you save

• Refers to the part of your income that you spend.

What are the 4 categories of assets? Give an example for each one.

• Primary: house, car

  Secondary:  checking, savings

  Short-term:  stocks, bonds, 401(k)

  Long-term:  laptop, clothes, phone

• Real: house, car

  Live:  checking, savings

  Income:  stocks, bonds, 401(k)

  Pleasure:  laptop, clothes, phone

• Real: house, car

  Liquid:  checking, savings

  Investment:  stocks, bonds, 401(k)

  Personal:  laptop, clothes, phone

What does an income & expense statement show?

• Shows money coming in (income) & money going out (expenses)

  ---Shows your cash flow; either a surplus or a deficit

• Shows only money you make

• Shows what you should spend money on

If your networth is $50,000 and you pay off your student loan from your savings account, how will your net worth statement be affected?

• Your Networth will increase

• Both your liabilities and your assets will decrease by the same amount which means your net worth does not change.

• Your networth will decrease

How are assets listed on a net worth statement?

• By fair market value

• By taxes taken out

What meant by the term solvent?

• You don't have enough money to solve your debts

• You have enough assets to pay off all your debts (liabilities)

What is meant by earned income?

• Income given to you

• Income you have earned

• Taxes taken out on income

How is the consumer debt ratio calculated and what percentage should it be under?

• Total Monthly Loan Payments / Gross Income

  --It should be under 20%

• One month of Loan Payments / Gross Income --It should be under 10%

Which of the following is not included in Social Security?

• Disability

• Unemployment

• Retirement

• Survivor benefit