Personal Financial Planning Final Exam

What is the family life cycle?

• A series of stages a family goes through over time

• A financial plan for retirement

• A method to calculate taxes

• A type of savings account

What is budgeting?

• A type of investment

• A way to avoid paying taxes

• A process of creating a plan to spend your money

• A method to increase income

How are the family life cycle and budgeting related?

• They both are unrelated to personal finance

• They both focus on short-term financial goals

• They both require constant updating due to changes in life stages

• They both involve planning for vacations

What is a short-term financial goal?

• Going on a vacation

• Planning for retirement

• Saving for a child's education

• Buying a house

Which stage is NOT part of the family life cycle?

• Couple, retired

• Middle-aged, married with children

• Older, single

• Younger, single

What is the primary purpose of a budget?

• To avoid paying bills

• To increase debt

• To track expenses and income

• To eliminate all spending

What should you do if expenses exceed income?

• Take a vacation

• Increase spending

• Cut down on unnecessary expenses

• Ignore the problem

What is a Certificate of Deposit (CD)?

• A retirement plan

• An investment in the stock market

• A savings account with a fixed term and interest rate

• A type of checking account

What is a 401K plan?

• A government bond

• An employer-sponsored retirement plan

• A personal savings account

• A type of loan

Individual Retirement Accounts (IRAs) ________.

• Are an employer- sponsored benefit plan which provides individuals with the chance to put a portion of their earnings in a financial portfolio.

• Earn interest over time but have a limited number of transfers and withdraws allowed.

• Allow individuals to open an account and begin saving funds toward retirement with tax benefits.

• Are similar o savings accounts but has higher interest rates, fixed terms and a fixed interest rate.