WorksheetsPhase 3 Student Competition Quiz
Total questions: 7
Worksheet time: 5mins
What is the primary difference between 'Good Debt' and 'Bad Debt'?
Good Debt = not manageable debt
Bad Debt = manageable debt
Good Debt = short-term debt
Bad Debt = long-term debt
Good Debt = high interest rates
Bad Debt = low interest rates
Good Debt = increases wealth
Bad Debt = decreases wealth
How much money should be in your 'Emergency Fund'?
$2500 - $5,000
6-12 months worth of living expenses
3-6 months worth of living expenses
Minimum $5,000
What is the role of an 'Emergency Fund' in preventing 'Bad Debt'?
It provides a financial cushion for unexpected expenses, reducing the need to rely on loans
It increases the need for debt
It decreases savings
It avoids financial planning
Why is it important to avoid loans for 'Wants' or 'Luxury Items'?
Because these must be paid for from your budget with cash so that you avoid unnecessary debt
Because they are tax-deductible
Because they decrease your debt
Because they increase your savings
Scenario Question (Double Points!)
You have a $5,000 balance on a high-interest credit card and receive a $3,000 bonus.
How should you use the bonus?
Invest it into long term diversified funds
Pay off as much of the credit card balance as possible
Spend it on a vacation
Add the money to your 'Savings' bucket
Scenario Question (Double Points!)
Jake has an emergency fund of $1,500 and faces an unexpected car repair costing $1,200. Should he use his emergency fund or put it on a credit card?
Pay the expense using a credit card loan
Use the emergency fund to avoid bad debt
Borrow money from his family or friends
Delay the repair until he gets his bonus
Scenario Question (Double Points!)
Tom realises he doesn't have an emergency fund, but he wants to invest money into long-term diversified funds to build his wealth. What should he do?
Invest in the stock market and use his 'Wants' bucket to cover any future emergencies
Invest in the stock market and take out a loan to cover future emergency expenses
Build an emergency fund in a high-interest savings account before investing
Build an emergency fund and then never invest into diversified funds as its too risky
