Financial Literacy Proficiency Exam Review #2 2022

The first step you should take when you want to make a large purchase is . . .

• Get a new credit card

• Ask your parents to loan you the money

• Sell something and use the proceeds

• Decide how much you'll need to save and the time frame you want to save it in

The best way to build wealth is to start investing early. You should start investing money . . .

• When the stock market is performing really well

• Once you're out of college, living debt-free, and have 3–6 months of living expenses saved

• As soon as you have extra cash

• Once you have a fully-funded emergency fund

Why do some accounts, like savings accounts at your local bank, earn interest?

• Because those accounts always have great interest rates

• Because you deposit money, adding to your principal each month

• Because the bank pays you to use your money

• Because of inflation

The law that states, "It's not if an emergency will happen, but when."

• Maritime law

• Newton's law

• Murphy's law

• Curie's law

If you really want to save money, you've got to...

• not travel

• live on less than you make

• invest in a Roth IRA

• have a financial advisor

The purpose of an emergency fund is to . . .

• Be able to cover an unexpected expense with cash and protect you from having to pile up debt when something goes wrong.

• Have some extra money in a checking account in case you need to transfer some to your spending categories.

• Teach you discipline—saving is purely a good exercise in self-control.

• . Teach you how to invest in growth stock mutual funds.

The main reasons for saving your hard-earned money are . . .

• Paying for your dream home, buying your dream car, and going on your dream vacation

• Emergencies, large purchases, and wealth building

• . Investing, indulging, and influencing

• Buying gifts, donating to charities, and building up a college fund for your kids

Once you're out of school, have started your career, and have zero debt, your emergency fund should have ____.

• $3,000

• 3–6 months of living expenses

• 3–6 months of income

• $5,000

Something that credit card commercials don't show you is . . .

• How happy your parents will be that they don't have to lend you cash anymore

• How much your credit score will grow right away

• . People making payments for months or years on those credit card purchases

• How great your life will be with payments

When a homeowner takes out a home equity line of credit (HELOC), that loan can only be used for home repairs and renovations.

• True

• False