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WorksheetsPersonal Finance Semester Review
Total questions: 50
Worksheet time: 2hrs 40mins
Overdraft protection...
is a service offered only for premium checking accounts.
brings in a few hundred dollars each year to banks.
is a fee-free service that prevents you from overdrawing.
can keep you from overdrawing but charges a fee.
Which of the following will DEFINITELY show up on your bank statement at the end of July? (hint: choose 2 correct answers)
Ice cream bought with your debit card on July 16th
A salad bought with cash on July 5th
A birthday check you gave to your brother on July 18th
An ATM withdrawal you made on July 21st
A checking account is best used for...(hint: choose 2 correct answers)
Saving money
Storing money to spend
Investing money
Placing money you earn
Which of the following is TRUE about checks? (hint: choose 2 correct answers)
You should endorse the back when writing a check
The amount of money is written both numerically and in words
Checks should show up on your statement within 30 days
You should endorse the back when depositing a check
Mobile or email alerts for your checking account can notify you of...(hint: choose 3 correct answers)
Low balances
Unusual activity
Deposits
Credit Card transactions
What is a reason for why so many Americans live paycheck-to-paycheck?
Many people are paying themselves first and then spending
Many people only buy what they NEED, not what they WANT
Many people impulse shop
Many people spend within their budget
Which is TRUE about online saving accounts? (hint: choose 2 correct answers)
Usually have higher interest rates than non-online accounts
They usually have lower costs compared to brick-and-mortar banks
Online accounts are not FDIC insured
You can withdraw money an unlimited # of times
Where do banks get the money to lend out to consumers?
From their clients' credit card accounts
From their clients' savings accounts
From the Federal government
From their own money vaults
How do banks make money off of the credit they issue?
They charge a large, one-time fee at the start of the loan
They take out a small fee each month from your checking account
They charge a high interest rate on the loan
This is a trick question - they DON'T make money!
What information on a Schumer Box should you focus on when choosing a credit card? (hint: choose 3 correct answers)
The term of the credit card
Annual Percentage Rate (APR)
Grace Period
Fees
How do you avoid paying interest on your credit card (or any other loan for that matter)?
Always make the minimum payment over time
Pay interest 1st, then pay what you can on leftover balance
Always make the full payment on time
Pay the principal 1st, then pay what you can on interest
Which is TRUE when you make only the minimum payment each month?
You ar charged interest on the remaining balance
Your credit line is restored to its maximum amount
Credit card companies have permission to sell your information
It is the fastest way to pay off your debt
How are credit cards and debit cards different?
They're both linked to a checking account in different ways
Some debit cards say VISA on them; credit cards don't
With a credit card, you are borrowing from yourself
A credit card can offer perks such as purchase protection
Which best describes how a credit card works?
The credit card company extends you a line of credit. You then pay a small percentage of the cost of those purchases in one annual payment.
The credit card company extends you a line of credit. You purchase "stuff" and the purchase gets directly paid with funds in your checking account.
The credit card company extends you a line of credit. This is free money that you can use to purchase the "stuff" that you need.
The credit card company extends you a line of credit. You purchase "stuff" and then have the choice to pay the balance in full or a minimum payment each month.
What is a Schumer Box?
A table included with credit cards that tells you how to stay out of debt
A table that shows the terms when taking out a loan
A table included with credit card marketing materials that summarizes the costs associated with the credit card
If you’re trying to gain access to a credit card before you turn 21, which of the suggestions rely on the support of your parent or guardian? (choose 2)
Getting a cosigner
Getting student loans
Getting a secured credit card
Being added as an authorized user
A credit card is which of the following? Choose all that apply.
Installment loan
Revolving Credit
Secured Debt
Unsecured Debt
Why is compound interest more beneficial than simple interest? (Choose 2)
Your money grows faster when it is compounded
You earn interest on your interest
Fees for compound interest are greater than simple interest
Compound interest is hard to calculate, so fewer use it
The relationship between risk and return can be stated as...
Higher risk indicates higher return
Higher risk indicates lower return
Lower risk indicates higher return
No relationship exists between risk and return
How can you make money on stocks? (choose 2)
A capital gain
Interest
Dividends
Holding the stock at least 3 years
Compound Interest
Which is NOT an example of an asset class?
Stocks
Bonds
Cash
Capital Gains
Index Funds
A diversified portfolio is desirable because...
It limits investment choices
It's a good predictor on rate of return
It increases risk and return
It decreases risk
Which of the following accurately describes asset allocation? (choose 2)
Well-balanced portfolio of different stock classifications
Dividing among different asset categories based on risk
Dividing among different asset categories based on time
Chance your investment won't be worth as much in the future
Why is it important to start investing as soon as possible?
You take less risk when you are young, so money will be safe
You have more time for your money to compound
Investing is an easy way to make quick money
Fees on investments are cheaper when you are younger
All of the following are reasons that it is important to start saving or investing early. Which is the least important?
Money accrues more interest if saved or invested earlier (longer time for compounding interest).
You never know when an emergency will occur, and you may need your savings when it does.
You need to make sure you can buy all the cool stuff that you see your neighbors, friends, or family buying so you can look cool too.
You will have to invest more money if you start later in order to achieve the same retirement goal. As you age, the “catch up” savings for retirement will be huge to compensate for not saving when you were younger
Most millennials have saved little to nothing for retirement. Fight the peer pressure and save early and often!
What does it mean to own individual stock?
You own a small portion of the company.
You get an individual discount to all the products or services of the company.
You are an employee of the company
You can make decisions about what the company does with their money
Which best describes a bond?
A loan you get from the bank
Something that holds stuff together
A loan given to a company or government by an investor.
Owning a small piece of a company or corporation
Which of the following are TRUE about gross income and net income? (hint: choose 2 correct answers)
Gross income and net income are the same
Net income is sometimes called "take home pay"
Gross income is the total amount earned before deductions
Net income is the total amount earned before deductions
How does the 50/30/20 rule of thumb for budgeting allocate your income?
50% Needs, 30% Wants, 20% Savings & Debt Repayment
50% Wants, 30% Needs, 20% Savings & Debt Repayment
50% Savings & Debt Repayment, 30% Wants, 20% Needs
50% Needs, 30% Savings & Debt Repayment, 20% Wants
Which is NOT a good method of keeping track of your expenses in a month?
Using an app like Mint
Using a spreadsheet
Using your debit/credit card statements
Using your memory
Which is NOT an important reason you need a budget?
A budget helps you figure out your long-term goals and work towards them.
It Helps Ensure You Don't Spend Money You Don't Have
You want to be the coolest kid on your street
It Helps You Prepare for Emergencies
Building a budget forces you to take a close look at your spending habits.
Which of these costs would be the MOST difficult to adjust if you were looking to reduce your expenses?
Dining out at local restaurants
Loan payment on a new car
Expenses for new clothes
Postponing a purchase for a big-screen TV
The two main portions of a budget are...
the money coming in (income) and the money you're spending (expenses)
the money coming in (expenses) and the money you're spending (income)
the cash you are spending in stores and the bills you are paying online
the items you want to buy and the money you need to save for retirement
Why is it important to be able to decide if an item is a NEED or a WANT?
Needs are worth spending money on, but you should never spend on a want
Needs can be very expensive, but wants are usually far less expensive so you don't need to keep track of them
You cannot create a budget that has both needs and wants included -- you need them each in a separate budget
When you budget, you should make sure all your needs are met first, then you can decide to spend on wants
Why should you use your NET pay when creating a budget?
Your net pay will always be higher, so you'll have more money to spend
Your net pay is a more accurate picture of how much money you have available to spend or save
Your employer knows what your gross pay is, but you only know what your net pay is
Once you have your net pay, you can figure out how much to deduct in taxes, and then you can do your budget
