Unit 2 Test Finance

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

• Wait until the end of the month and save whatever is left in your checking account

• Save a certain percentage of each paycheck and deposit it directly into a savings 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

Joelle wants to have an emergency fund to cover 6 months of her expenses. Her monthly gross pay is $4,000 and her monthly expenses are $2,000. If she plans to save 10% of her gross pay each month, how long will it take her to build her emergency fund?

• 3 months

• 9 months

• 24 months

• 30 months

All of the following statements about bank accounts are true EXCEPT...

• 1. Prepaid cards typically include a lot of fees

• 1. Prepaid cards are a useful option for someone who is unbanked to make online purchases

• 1. Prepaid cards are a great way to build credit

• 1. Prepaid cards are usually accepted anywhere that debit and credit cards are accepted

Many banks pay interest on the money you deposit into your savings account, which of these statements is NOT correct?

• If the bank is FDIC-insured, your money, up to the FDIC limit, is safe even if the bank fails

• Many banks pay interest on the money you deposit into your savings account

• Historically, savings accounts earn higher returns than investments in the stock market

• Money in a checking account is usually easy to access via ATM, debit card or check

You are developing a savings plan and using short-, medium-, and long-term goals to motivate you. Which represents possible goals in order from short-term to long-term? Save for...

• Retirement, a house down payment, college tuition

• A new cell phone, college tuition, a house down payment

• A new cell phone, dinner with friends this weekend, a new bike

• Retirement, college tuition, a vacation

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

• 1. Needs, wants, savings

• 1. Savings, needs, wants

• 1. Needs, savings, wants

• 1. Wants, needs, savings

Which represents the BEST time to start saving for your retirement?

• As soon as you have your first full-time job

• Right after you pay off your student loans

• Once you are debt-free, including paying off all credit cards, auto loans, and your mortgage

• At age 45, so you have exactly 20 years until retirement

Which of the following statements are true?

• The majority of Americans have an adequate emergency fund and sufficient amounts of money saved for retirement

• The majority of Americans have sufficient amounts of money saved for retirement

• The majority of Americans have an adequate emergency fund, but do NOT have sufficient amounts of money saved for retirement

• The majority of Americans do NOT have an adequate emergency fund or sufficient amounts of money saved for retirement

Experts recommend that you accumulate enough to cover 3 to 6 _______________ of expenses in your emergency fund.

• Days

• Weeks

• Months

• Years

Three of these statements best describe a checking account. Which statement best describes a savings account?

• This account offers a convenient way to pay bills and access cash from an ATM

• This account pays you interest on money you have put away for later to help your money grow

• This account is automatically debited when you use a debit card

• This account typically allows an unlimited number of transactions per month