Personal Finance Review Part 1 Spring 2025

Sylvester is taking out a loan and is confused by the jargon. Which of the following explanations might help him?

• PRINCIPAL is how much he owes per month, and TERM is how much he owes overall

• INTEREST RATE is how much the lender charges per year for the loan, and PRINCIPAL is the initial amount Sylvester takes out

• MONTHLY PAYMENT is how much interest costs him each month, and TERM is the name of his lender

• TERM is the length of the loan, and INTEREST RATE is how much total money he will pay

Which should you use when creating a budget - your NET PAY or GROSS PAY?

• Net pay, because it’s what is reported to the government by your employer for tax purposes.

• Gross pay, because it’s the total amount you’ve earned that month.

• Net pay, because it’s the total amount you’ve earned minus taxes and other deductions.

• Gross pay, because it’s the total amount you’ve earned minus any recurring bills you owe for the month.

In the 50/30/20 budgeting strategy, what does the 20% represent?

• Savings and debt repayment

• Essential needs like rent, utilities, and groceries

• Discretionary spending on wants like entertainment and dining out

• Retirement contributions and emergency fund savings

What does the sticker price of a college refer to?

• The cost of textbooks and supplies for one academic year

• The total cost a student actually pays after financial aid and scholarships

• The average amount students pay after receiving grants and scholarships

• The published cost of tuition, fees, room, and board before any financial aid is applied

What does a credit score measure?

• The total value of your assets

• The amount of savings you have

• The number of credit accounts you have open

• Your ability to manage and repay borrowed money

Which of the following are modern methods of accessing money from your checking account?

• online bill payments

• online banking/mobile apps

• direct deposit

• all of the above

What is the difference between a premium and a deductible in insurance?

• A premium is the amount your insurance will pay, while a deductible is the amount you must pay to the insurance company.

• A premium is the amount you pay per claim, while a deductible is the cost of your insurance coverage.

• A premium is a one-time payment, while a deductible is paid monthly.

• A premium is the amount you pay each year for insurance, while a deductible is the amount you pay out-of-pocket before your insurance starts covering costs.

In order to qualify for financial aid, prospective college students must file their _____________.

• FAFSA

• Financial aid letter

• Parent's credit score

• PSAT, SAT, or ACT scores

Which of the following best describes the amount of money you'll have if you put $1000 into a CD earning 2% annual compound interest for 10 years? You can ignore the impact of inflation in this question.

• Slightly more than $1200

• Exactly $1200

• The same $1000 you started with

• $2000

When discussing credit scores, your friends make the following statements. Which one of them is WRONG?

• Kwame says, "Using your credit card every month, but paying off the balance each time, is a great way to boost your credit score.”

• Jessie says, "Once you turn 18, it will be really easy to get approved for a credit card."

• Joel says, "It's best to establish credit early, so you have a long credit history before you apply for a mortgage."

• Casnell says, "Even if you close a credit card, the record of that card stays on your report for several years."