Personal Finance Knowledge

You see on a commercial that OrangeCo is offering a credit card with a 5% cashback program for all cardholders. Which question might help you evaluate how good this offer is?

• Does the cashback program apply to all purchases or only specific types of purchases like gas and groceries?
• Can I get a debit card along with a new credit card?
• Who does OrangeCo use as their spokesperson in the commercial?
• Do I still get the cash back even when I return my purchases to the store?

Fill in the blanks with the correct responses. If you follow the 50-20-30 rule of budgeting, you'll be putting 50% of your monthly income toward _______________, 20% of your monthly income toward _____________, and 30% of your monthly income toward ______________.

• Needs, wants, savings
• Wants, needs, savings
• Needs, savings, wants
• Savings, needs, wants

Which one of these expenses most likely represents a VARIABLE cost in someone's budget?

• Car insurance premium
• Student loan payment
• Rent
• Electricity bill

Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?

• Amortized loans typically have much higher interest rates than credit cards, so they're the best place to put your extra cash.
• Every time you pay extra, the lender will reduce the interest rate they're charging by a small amount.
• The extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan.
• The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly

Which description is most accurate for a Zero-Based Budget?

• You spend your checking account balance down to $0 every month
• You spend your saving account balance down to $0 every month
• You pay every one of your debts down to $0 every month
• You put every dollar of your take-home pay into a budget category each month

Which of the following statements about banks is FALSE?

• Historically, savings accounts earn higher returns than investments in the stock market
• Many banks pay interest on the money you deposit with them
• If it is FDIC-insured, your money is safe even if the bank fails
• Money in a bank is usually easy to access via ATM, debit card or check

Lance is at the grocery store and has three options for buying boxed mac and cheese: 1 box for $1.78, a 3-pack for $6, or a 4-pack for $8. Comparing unit costs, which statement is true?

• A 4-pack is the best deal
• Lance will save the most if he gets one of each -- a single box, a 3-pack, and a 4-pack
• A single box is the best deal
• A 3-pack is the best deal

You are putting together your first post-graduation budget. Your take-home pay will be $2,500 per month. You estimate your monthly costs to be rent of $800, car payment of $350, car insurance of $150, car maintenance of $50, entertainment of $500, food expense of $250, mobile phone of $75, student loan payment of $225 and other expense of $300. How would you describe your budget after analyzing all of your income and expenses?

• You have a surplus of $5,200
• You have a surplus of $200
• You have a deficit of $2,700
• You have a deficit of $200

Which of the following is an effective strategy for personal saving?

• Save a certain percentage of each paycheck and deposit it directly into a savings account
• Wait until the end of the month and save whatever is left in your checking account
• Cover all of your wants and needs and save whatever is left over
• Take out a payday loan so you can save before you receive your paycheck

You are interested in renting an apartment for your senior year in college. You meet with the landlord, complete the application, and after checking your credit background and references, the landlord approves your application. In most cases, you will need to provide the landlord with _________ at the time you sign the lease in order to get the apartment.

• First month's rent and a security deposit
• Rent payment for the first three months
• An additional list of references and copies of your last three tax filings
• A $500 bonus payment for awarding you the apartment