Personal Finance Final Exam Review

A money principle to keep in mind is to live on ____________ you make.

• Exactly 20% below
• More than
• Less than

You should always make sure you have a…

• Budget
• Credit line
• Direct deposit

What does living paycheck to paycheck mean?

• Living paycheck to paycheck is an expression used to describe a situation when someone eagerly awaits their next paycheck to plan for the month’s expenses.

• Living paycheck to paycheck occurs when a person’s income is devoted to expenses which, in turn, means that little to no money is put in savings.

Personal Finance is 20%__________ and 80%____________.

• Behavior; Saving
• Head knowledge; Behavior
• Budgeting; Head knowledge
• Spending; Wealth

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

• Because you deposit money, adding to your principal each month
• Because the bank pays you to use your money
• Because of inflation
• Because those accounts always have great interest rates

Compound interest is earned at a fixed rate, while ____________ is an average based on an investment's past performance.

• Compound growth
• The Fifth Foundation
• Interest rate
• The principal

Banks and lenders use credit scores to determine . . .

• The likelihood that someone is able to repay debt
• How much collateral someone has available to put up for a loan
• A person's financial responsibility
• How successful someone is

___________require the borrower to put up collateral for the loan.

• Secured loans
• Revolving credit
• Interest rates
• Unsecured loans

An example of discretionary spending is _________.

• Monthly rent
• Transportation
• Utilities and food
• Nonessential goods and services

Which is NOT one of the three basic reasons for saving money?

• Have money available to lend to friends
• Build wealth
• Emergency fund
• Large purchases