Financial Literacy Worksheet Extracted Questions

Income is necessary in order to afford monthly bills and save for the future. What is the BEST way to consistently earn income?

• getting a job

• investing in stocks

• applying for a loan

• obtaining a credit card

Richard has struggled financially in recent months. He decided to establish a household budget to help him resolve his problems. Why will Richard benefit from this decision?

• It will help Richard responsibly manage how he spends his monthly income and eliminate any unnecessary expenditures.

• It will help Richard increase his monthly income and reduce the amount of taxes he is required to pay to the government.

• It will help Richard decrease the amount of money he needs to save to meet his major financial goals each month.

• It will help Richard limit the risk of his financial investments and make sure that he is able to receive a high return.

Fabian often runs out of money before his monthly credit card bills are due. He does eventually pay the bills, but he also has to pay fees for late payment. What is the MOST financially responsible action Fabian could take?

• obtaining a loan from his bank

• applying for additional credit cards

• developing a personal monthly budget

• asking his employer for a salary increase

Natalia, an eighth-grade student, has five savings goals. She wants to save enough money for: 1. College tuition 2. Her eighth-grade class trip 3. A car for when she is 16 4. A future trip to Washington, DC 5. A present for her sick friend. Which items from the list represent short-term savings goals for Natalia?

• 2 only

• 3 only

• 2 and 5

• 3 and 5

Which is the best reason for saving?

• To buy what one wants now

• To leave money to loved ones

• To achieve future goals

• To have money in your pocket right now

What is a risk of carrying too much debt?

• being required to work without pay

• being required to pay higher taxes

• being unable to receive future credit

• being unable to earn a reliable income

Ramon would like to buy a new car. He wants to finance the purchase with a loan from a bank. Why would Ramon want to use a bank loan to buy the car?

• Ramon will pay less overall for the car with the loan than he would have if he paid the full price in cash.

• Ramon will pay a lower income tax rate by accepting the loan than if he paid for the car with his own money.

• Ramon can improve his personal credit rating by repaying the loan using his credit card.

• Ramon can enjoy the benefits of using the car now without fully paying for it immediately.

Which of the following allows a person to determine the amount of money available for expenditures?

• personal budget

• credit card limit

• savings account

• retirement plan

Which of the following is NOT a common use of debt?

• Financing business expansion

• Purchasing assets like homes or cars

• Paying off existing debt

• Increasing disposable income

Read the text and answer the question. Each month, Aiden closely follows a budget and sets aside the same 15% amount for savings. Brandon, meanwhile, puts any money he has left over after bills and spending into his savings each month. While some months Brandon is able to save 15%–20% amount of money, other months he spends more than he earns and has to withdraw money from his savings to pay his necessary expenses. Which individual is more likely to be financially prepared in the event of an emergency and why?

• Aiden is more likely to be financially prepared for an emergency than Brandon because Aiden does not spend any money on entertainment.

• Brandon is more likely to be financially prepared for an emergency than Aiden because Brandon's rate of savings changes with his circumstances.

• Brandon is more likely to be financially prepared for an emergency than Aiden because some months Brandon puts large amounts into his savings.

• Aiden is more likely to be financially prepared for an emergency than Brandon because Aiden saves at a steady rate even if the monthly amount is low.