Banking Unit Test

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

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

• 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 from short-term to long-term? Save for...

• 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 _____________.

• a. Needs, wants, savings

• b. Savings, needs, wants

• c. Wants, savings, needs

• d. Needs, savings, wants

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 is TRUE?

• The majority of Americans have an adequate emergency fund

• 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.

• Months

• Weeks

• Days

• 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

You overhear your Aunt Tina tell your mom that she, her husband, and their kids are "living paycheck to paycheck." What does Aunt Tina mean by that?

• Aunt Tina gets a paycheck one month, and her husband gets a paycheck the next month; they alternate pay periods

• Aunt Tina and her family don't have any money saved, and their paychecks are just barely covering monthly expenses

• Aunt Tina and her family have high paying jobs and don’t worry much about money

• Aunt Tina only receives paper paychecks instead of direct deposit

You are at the checkout counter at the local supermarket and use your debit card to pay for your groceries. Where does the money for this purchase come from?

• Your credit card company covers the cost

• It is deducted directly from your checking account

• Your credit card company provides you with a cash advance to cover the cost

• It is deducted directly from your savings account