NSSF Financial Literacy Training

What is the first step in creating a budget?

• List your expenses

• Track your income

• Create a savings goal

• Apply for a loan

Why is it important to track your spending?

• To spend more money on luxuries

• To see where your money goes and identify areas to save

• To avoid paying taxes

• To increase your credit score

How can cutting unrestricted spending help you stay within a budget?

• It reduces the amount of money you owe in loans

• It increases your credit score

• It frees up money for savings or paying off debt

• It prevents you from overspending on groceries

Why is it essential to have an emergency savings fund?

• To pay for vacations

• To cover unexpected expenses like medical bills or car repairs

• To invest in stocks

• To buy luxury items

How does compound interest benefit your savings?

• It causes your savings to grow at a faster rate over time

• It reduces the amount of money you earn in interest

• It increases the interest rate you pay on loans

• It makes it more difficult to withdraw funds

According to the 5 Jewish Jars, how much of your monthly income should be saved?

• At least 10%

• At least 50%

• At least 25%

• At least 75%

What is the difference between short-term and long-term savings goals?

• Short-term goals are achieved in less than a year, while long-term goals take more than five years

• Short-term goals are always for large purchases, while long-term goals are for emergencies

• Short-term goals focus on retirement, while long-term goals focus on vacations

• Short-term goals are always for investments, and long-term goals are for debt repayment

What is the primary difference between stocks and Treasury bonds?

• Stocks are a loan to the company; Treasury bonds are ownership in the company

• Stocks are ownership in a company; Treasury bonds are long-term loans to the Government.

• Treasury Bonds pay higher returns than stocks

• Stocks are less risky than Treasury bonds

Why is diversification important in an investment portfolio?

• It reduces the risk by spreading investments across different assets

• It guarantees higher returns

• It eliminates the risk of losing money

• It increases the amount of interest earned

What is the risk-return tradeoff in investing?

• Higher risk usually leads to lower potential returns

• Lower risk usually leads to higher potential returns

• Higher risk usually leads to higher potential returns

• There is no risk involved in investing