Unit 1 Review (Banking)

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 are true about prepaid cards EXCEPT…

• Prepaid cards typically include a lot of fees
• Prepaid cards are a useful option for someone who is unbanked to make online purchases
• Prepaid cards are a great way to build credit
• Prepaid cards are usually accepted anywhere that debit and credit cards are accepted

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 ______________.

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

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.

• 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

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

Which of the following transactions will REDUCE your checking account balance immediately?

• Writing your monthly rent check which you will mail tomorrow
• Using your debit card to pay for groceries at the supermarket
• Using your credit card to pay for your school books
• Depositing a check at a local bank branch