Financial Literacy and Planning Quiz

Its objective is financial security and independence so that an individual or family can meet expected expenses and withstand monetary emergencies.

• Financial Planning

• Budgeting

• Financial Literacy

• Investment Strategy

Answer explanation

Financial literacy encompasses the knowledge and skills needed for financial security and independence, enabling individuals or families to manage expenses and handle monetary emergencies effectively.

According to Mr. Rioch, what are the two things worth going into debt for?

• Education and a car

• Education and a house

• A car and a vacation

• A house and a vacation

Answer explanation

Mr. Rioch believes that education and a house are worthwhile investments that can lead to long-term benefits, making them the two things worth going into debt for.

What do the letters in the acronym SMART stand for?

• Specific, Measurable, Achievable, Relevant, Time-bound

• Simple, Manageable, Achievable, Realistic, Timely

• Specific, Manageable, Achievable, Realistic, Time-bound

• Simple, Measurable, Achievable, Relevant, Timely

Answer explanation

The acronym SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound. This framework is used for setting clear and attainable goals.

A financial goal that is achieved between 3 months to a year is called:

• Short-term goal

• Medium-term goal

• Long-term goal

• Immediate goal

Answer explanation

A financial goal achieved within 3 months to a year is classified as a short-term goal. This distinguishes it from medium-term and long-term goals, which span longer time frames.

Give one example of earned income.

• Interest from savings

• Salary from a job

• Lottery winnings

• Gift from a friend

Answer explanation

Earned income refers to money received for work performed. A salary from a job is a direct payment for services rendered, making it a clear example of earned income, unlike interest, lottery winnings, or gifts.

Give one example of unearned income.

• Wages from part-time work

• Dividends from stocks

• Freelance project payment

• Bonus from employer

Answer explanation

Unearned income refers to money earned without active work. Dividends from stocks are a prime example, as they are payments made to shareholders from a company's profits, unlike wages or freelance payments which require work.

What is the difference between gross and net income?

• Gross income is after taxes; net income is before taxes.

• Gross income includes bonuses; net income does not.

• Gross income is before deductions; net income is after deductions.

• Gross income is only salary; net income includes all earnings.

Answer explanation

Gross income refers to total earnings before any deductions, such as taxes or benefits. Net income is what remains after these deductions are taken out, making the correct choice: 'Gross income is before deductions; net income is after deductions.'

Other than income tax, what other deduction could come out of your paycheck?

• Lottery tax

• Health insurance premium

• Sales tax

• Property tax

Answer explanation

Other than income tax, a common deduction from your paycheck is the health insurance premium, which is deducted to cover your health coverage costs. Lottery tax, sales tax, and property tax are not typically deducted from paychecks.

Give an example of a fixed expense.

• Monthly rent

• Grocery shopping

• Entertainment costs

• Clothing purchases

Answer explanation

Monthly rent is a fixed expense because it remains constant each month, unlike grocery shopping, entertainment costs, or clothing purchases, which can vary.

Give an example of a variable expense.

• Car loan payment

• Utility bills

• Mortgage payment

• Subscription services

Answer explanation

Utility bills are variable expenses because they can fluctuate each month based on usage. In contrast, car loan and mortgage payments are fixed expenses, while subscription services can also vary but are typically more predictable.