Unit 1: Intro to Personal Finance

Which of the following statements best describes how Americans are being outsmarted by banks and other lenders?

• Credit is marketed so well that we desire to have it while completely dismissing the fact that interest rates and fees continue to destroy our financial well-being.

• We are taught that we can buy happiness.

• Buying things on credit has become acceptable in our culture.

• We are driven by consumerism.

Having debt limits your wealth building.

• True

• False

When developing a personal financial plan, one of the first things you should do is assess your current financial situation. This includes your income, assets and liabilities.

• True

• False

Which of the following statements best explains why income alone does not determine wealth?

• Investing is the only factor that contributes to wealth building.

• Income alone does determine a person’s wealth.

• Only people who are natural savers can become wealthy.

• How much money a person makes does not dictate his or her spending and saving behavior.

Which of the following is not a true statement?

• Americans learned to borrow amidst post-WWII prosperity.

• The credit industry in America has not changed much since 1917.

• After 1970, consumer debt skyrocketed.

• As banks made higher profits, they were willing to lend more money to consumers.

Which of the following is not a benefit of understanding your own money personality?

• Recognizing who you are allows you the opportunity to grow and learn.

• Once you know your money personality, you can develop a financial plan that works for you.

• Knowing your money personality allows you to excuse excessive spending because it is simply part of your nature.

• None of the above.

Key components of financial planning include all of the following except:

• Write out a detailed plan for accomplishing your goals

• Replace money myths with money truths

• Allow your financial planner to make all of your major money decisions

• Regularly monitor and reassess your financial plan

During the Great Depression, New Deal policymakers came up with mortgage (home loans) and consumer lending policies that convinced commercial banks that:

• Consumers would not be willing to use credit, since borrowing money for large purchases had not previously been an option for the middle class

• They would not be able to compete with loan sharks in the industry of consumer lending

• Consumer credit could be profitable

• Consumer credit was not a profitable industry

Most Americans today are wealthy and will have financial security when they retire.

• True

• False

When it comes to managing money, success is about ___% knowledge and ___% behavior.