Financial Planning and Money Management (W!se Section 8, Part 1)

What is the purpose of financial planning?

• To track daily expenses

• To create a roadmap to help achieve goals in life.

• To invest in risky ventures

Answer explanation

How can liabilities affect personal net worth?

• Liabilities reduce net worth

• Liabilities double net worth

• Liabilities have no impact on net worth

Answer explanation

• A liability (generally speaking) is something that is owed to somebody else.

Liabilities can be contrasted with assets.

Liabilities refer to things that you owe or have borrowed;

assets are things that you own or are owed.

What is the purpose of a will?

• To distribute assets (savings, car, home, etc.) after death

• To pay off debts (money you owe)

• To invest in the stock market

Answer explanation

• With a will, you can direct where and to whom your estate (what you own) will go after your death.

• PREVENT FAMILY FIGHTS: A clear expression of your wishes helps prevent costly, time-consuming disputes over distribution of your assets.

• PROTECT your CHILDREN: If you have minor children, a will allows you to appoint a guardian should both you and their other parent both pass away.

What is the purpose of tax revenue collected?

• To buy luxury items for government officials

• To invest in private businesses

• To distribute among citizens

• To fund government operations and public services

How can taxes be assessed to influence a change in behavior?

• By reducing the tax rate for everyone

• By increasing tax on harmful products

• By increasing tax on essential items

• By reducing tax on harmful products

What is the purpose of a living will?

• To plan for retirement

• To appoint a guardian for minors

• To specify medical treatment preferences

• To distribute assets after death

How do life cycle/stages of life influence money management?

• They have no impact on money management

• They affect budgets, spending, insurance needs, etc.

• They only affect retirement planning

• They only affect education planning

What is the purpose of a tax refund?

• To pay off debts

• To fund government operations

• To provide a financial boost to taxpayers

• To invest in the stock market

What is the purpose of determining personal net worth?

• To understand one's financial position

• To create a roadmap for financial planning

• To increase liabilities

• To track daily expenses

What are the considerations for a financial plan?

• Financial goals, investment and insurance needs, net worth, savings, education, major purchases, emergencies, caretaking, college and retirement planning

• Net worth and savings

• Only investment needs

• Only financial goals