Basics of Financial Literacy

What is the definition of a budget?

• Loan from a bank

• A type of bank account

• A plan for spending and saving money

• A form of investment

Which of the following is considered a fixed expense?

• Groceries

• Rent

• Entertainment

• Clothing

What does the term "interest rate" refer to?

• The cost of a home loan

• The amount of money in your wallet

• The percentage charged for borrowing money

• The number of checks you write

Which of the following is an example of income?

• Buying groceries

• Paying a bill

• Salery from a job

• Taking out a loan

What is the main purpose of a savings account?

• To invest in stocks

• To pay monthly bills

• To borrow money

• Work for retirement

Which of the following best describes a credit score?

• Total money in your savings account

• A number that represents your credit worthiness

• The total of your monthly expenses

• The interest rate on your loan

What does the term "principal" mean in relation to a loan?

• The amount of funds needed to pay off total debt

• The interest paid on the loan

• The total amount repaid

• The original amount of money borrowed

Which of the following is NOT a type of investment?

• War Bonds

• Stocks

• Checking account

• Mutual funds

Which document shows your earnings and taxes withheld for the year?

• W-2 form

• Bank statement

• Credit report

• Loan agreement

What is the main function of insurance?

• To provide savings accounts

• To increase your income

• To protect against financial loss

• To invest in stocks