Personal Finance Quiz

What is personal finance?

• The study of how to make money

• The process of investing in the stock market

• The process of managing your personal expenses

• The system through which your income flows out eventually into you having things and surviving

What is the purpose of a checking account?

• To store and save up your money

• To earn interest on your money

• To invest in the stock market

• To manage your mandatory living expenses

What is the recommended amount to keep in a checking account?

• As much as possible to earn interest

• None, it's better to keep all your money in a savings account

• At least 1 month's worth of expenses

• At least 3 months' worth of expenses

What is the purpose of the 50-20-30 rule?

• To allocate your income to mandatory living expenses, nice to have expenses, and savings

• To allocate your income to groceries, debt payments, and savings

• To allocate your income to rent, entertainment, and savings

• To allocate your income to mandatory living expenses, savings, and investments

How can you reduce your mandatory living expenses?

• Negotiate bills and shop around for better prices

• Cut out all non-essential expenses

• Take on more debt

• Increase your income

What is the purpose of a credit card?

• To build credit and earn rewards

• To pay for mandatory living expenses

• To invest in the stock market

• To borrow money for long-term expenses

What is a credit score used for?

• To determine your spending habits

• To determine your income level

• To determine how trustworthy you are with a loan

• To determine your credit card limit

What is the recommended approach to using a credit card?

• Pay off the balance in full every month

• Only make the minimum payment each month

• Don't use a credit card at all

• Max out the credit limit

What is the purpose of general savings?

• To pay off debt

• To save for short-term and medium-term goals

• To invest in the stock market

• To cover mandatory living expenses

What is the recommended time frame for short-term goals?

• Less than 1 year

• 1-3 years

• 3-5 years

• 5-10 years