Chapter 1 Test

Which is NOT a benefit of a financial plan?

• Goal Setting

• Budgeting

• Impulse Buying

• Debt Management

Which of the following helps improve your standard of living?

• Only buying luxury items

• Pursuing higher education

• Avoiding all investments

• Spending all your income

To improve your credit score, you should:

• Pay bills on time and reduce debt

• Increase your spending

• Close all your credit accounts

• Avoid using credit altogether

What percentage of Americans have enough savings to cover a $1000 emergency?

• 25%

• 40%

• 50%

• 60%

Spending $5 on coffee every day adds up to how much annually?

• $365

• $730

• $1,825

• $2,500

Which of the following is a recommended strategy for spending money wisely?

• Prioritize wants over needs

• Create a budget and track your expenses

• Spend all your income before saving

• Avoid looking for discounts and deals

What is the median net worth of U.S. households?

• $50,000

• $120,000

• $192,700

• $250,000

To accumulate wealth, it’s advised to:

• Start saving and investing early

• Spend more than you earn

• Avoid buying assets

• Reinvest earnings only occasionally

Living below your means implies:

• Spending all of your income

• Creating surplus income for saving and investing

• Borrowing to support your lifestyle

• Avoiding investments

Personal financial planning is defined as:

• A process to manage debt

• A systematic process aimed at fulfilling financial goals

• An ad-hoc approach to managing finances

• A process exclusively for retirement planning