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WorksheetsSpring 2025 Pre/Post Test Personal Finance
Total questions: 99
Worksheet time: 2hrs 3mins
Why is having a good credit score important?
It ensures you will never have debt.
It allows you to avoid paying taxes.
It helps you get better loan terms.
It guarantees you will get a job.
What is considered a good credit score according to FICO?
740-799
670-739
580-669
300-579
Which factor makes up the largest percentage of your FICO credit score?
Payment history
Credit mix
Length of credit history
Recent credit inquiries
What is one benefit of having a good credit score?
Higher interest rates
Fewer housing options
Easier credit approval
More credit inquiries
How can you maintain a good credit score?
Close old credit accounts
Use more than 50% of your credit limit
Pay bills on time
Apply for multiple credit cards at once
What does a credit utilization ratio reflect?
The types of credit accounts you have
How much of your available credit you are using
The length of your credit history
The number of credit cards you own
What is one way to improve your credit score?
Apply for new credit frequently
Dispute errors on your credit report
Keep credit utilization high
Miss a few payments
What is the impact of having a credit score over 670?
You have poor credit
You are in the subprime category
You have good credit
You cannot get a loan
What is the highest possible FICO credit score?
850
900
800
750
Which factor has the largest impact on your FICO credit score?
Length of credit history
Payment history
New credit
Credit mix
What percentage of your FICO score is determined by the amount owed?
30%
15%
10%
35%
Which of the following is NOT included in your credit score calculation?
Amount owed
Credit mix
Payment history
Income
How often is your credit score generally updated?
Daily
Weekly
Monthly
Annually
What is the first step mentioned for building good money habits?
Start saving early and consistently
Write down your financial goals
Minimize high-interest debt
Check your accounts daily
Which of the following is a benefit of using a budgeting app?
It automatically increases your savings
It eliminates all your debts
It guarantees high returns on investments
It helps you track and log your income and expenses
What is the 24-hour rule designed to prevent?
Impulse spending
Overdraft fees
High-interest debt
Low credit scores
Why is it important to check your accounts daily?
To spot potential issues early
To earn more interest
To automatically pay off debts
To increase your credit score
What percentage of income do most experts recommend putting aside for savings?
25 percent
20 percent
15 percent
10 percent
What does the interest rate on a loan represent?
The annual cost of a loan to a borrower, including fees
The annual cost of a loan to a borrower, excluding fees
The monthly payment amount
The total loan amount
What additional costs are included in the APR that are not in the interest rate?
Loan term
Mortgage insurance and closing costs
Monthly payment
Principal amount
Why is the APR considered a better basis for comparing loans?
It includes the principal amount
It is required by the Federal Truth in Lending Act
It is always lower than the interest rate
It is based on the monthly payment
Which of the following is NOT included in the APR?
Loan origination fees
Mortgage insurance
Discount points
Principal amount
What should you compare to get a fair comparison of the total cost of loans?
Monthly payments
Loan terms
APR of different loans
Principal amounts
What is the 50/30/20 rule primarily used for?
Investing in stocks
Budgeting personal finances
Calculating taxes
Planning a vacation
According to the 50/30/20 rule, what percentage of income should be allocated to needs?
50%
30%
70%
20%
Which of the following is considered a 'want' under the 50/30/20 rule?
Health insurance
Mortgage payment
Streaming services
Groceries
What is a major criticism of the 50/30/20 rule mentioned in the text?
It is too complex to understand
It encourages too much saving
It does not account for individual financial situations
It is too flexible
What is the alternative budgeting method suggested in the text?
Incremental budgeting
Envelope budgeting
Zero-based budgeting
Activity-based budgeting
What is the main advantage of the 50/30/20 rule according to the text?
It is a flexible budgeting method
It provides a starting point for budgeting
It maximizes investment returns
It eliminates all debt
What is the first step in the debt snowball method?
Consolidate all your debts
Ignore the smallest debts
List your debts from smallest to largest
Pay off the highest interest rate debt first
What is the main advantage of the debt snowball method?
It requires no budgeting
It focuses on paying off the highest interest rate first
It reduces the total interest paid over time
It provides quick wins to keep you motivated
What is the 'Debt-Free Date'?
The day you start paying off your debts
The day you consolidate your debts
The day you pay off your mortgage
The day you finish paying off all consumer debts
What is the 'Minimum Payment'?
The interest rate on your debt
The total amount of debt you owe
The amount you choose to pay each month
The lowest amount you are required to pay on a debt each month
What does 'Nonmortgage Debt' include?
Only car loans
Only student loans
Only credit card debt
All debts except for home loans
What is the 'Principal' in terms of debt?
The total amount owed including interest
The monthly payment amount
The original amount borrowed without interest
The total amount of interest paid
What is the main criticism of the debt avalanche method?
It focuses on behavior rather than math
It may take longer to see progress on the first debt
It ignores interest rates
It requires a higher monthly payment
What is the 'Interest Rate'?
The percentage charged by lenders on the principal balance
The amount of money you borrowed
The monthly payment amount
The total amount of debt you owe
Why is the debt snowball method compared to a snowball?
Because it gains momentum as you pay off each debt
Because it requires a cold approach to finances
Because it involves rolling your debts into one
Because it melts away your debts
Paying down debts such as credit card balances is considered
part of your monthly needs.
part of your wants.
part of your savings strategy
part of your investment plan.
What is a key advantage of investing in bonds?
No risk of default
Unlimited growth potential
Steady income stream
High volatility
What do stocks represent?
Shares of ownership in a company
Debt obligations
Government securities
Cryptographic assets
Which investment is known for its decentralized nature?
Mutual funds
Cryptocurrency
Stocks
Bonds
What is a major risk associated with investing in stocks?
Fixed interest payments
Limited market access
Greater volatility
No potential for capital appreciation
What is a drawback of cryptocurrencies?
Guaranteed returns
Limited acceptance as a medium of exchange
Stable market prices
High regulation and oversight
What is a common feature of bonds?
Ownership in a company
Fixed-income securities
High liquidity
Digital currency
Which investment option is generally considered less volatile?
Cryptocurrency
Real estate
Bonds
Stocks
What is a potential benefit of investing in stocks?
Guaranteed income
Potential for higher returns
No need for research
Fixed maturity period
Which of the following payment types require you to pay upfront?
Money order
Cashier's check
Pre-paid card
All of the above
Which of the following is true?
Checks and Debit Cards both withdraw money directly from a bank account
Checks are the most widely accepted form of payment
Debit Cards often have a higher interest rate
Debit Cards offer the highest level of fraud protection
Which payment method typically charges the highest interest rate
Credit cards
Cashier's check
Pre-paid cards
Payday loans
Interest is:
a charge for lending money to a bank
the amount owed for borrowing money
the amount added into your savings when opening a bank account
a charge for the convenience of accessing money stored in your bank account
Anthony is deciding between different savings accounts at his bank. He has four options, based on how frequently interest compounds. Which should he choose if he wants the best rate of return on his interest?
Annual Compounding
Semi-Annual Compounding
Monthly Compounding
Daily Compounding
What is the typical relationship between time and interest rate?
Longer time period usually equals higher interest rates.
Shorter time period usually equals higher interest rates.
Longer time periods usually have no effect on interest rates.
Shorter time periods usually have no effect on interest rates.
Tamara has $500 she is looking to save for a class trip. She wants to earn the most possible interest and will not need access to her money for a full year. Which type of savings account will be best for Tamara?
Certificate of Deposit (CD)
Money Market Account
Savings Account
Checking Account
Which type of account typically has very high liquidity, low or no interest, and low minimum balance?
Checking Account
Money Market Account
Certificate of Deposit (CD)
Investment Retirement Account (IRA)
The purpose of a budget is to:
help you plan how you will spend the money you earn or receive.
stop you from spending too much money.
increase the balance of your savings account
tell you how much you owe the government in taxes
Which type of financial institution typically has membership requirements?
Credit Union
Online Commercial Bank
Commercial Bank
Federal Reserve Bank
Which of these fees would likely be the highest
Overdraft fee
Account transfer fee
Monthly service fee
ATM fee
The numbers on the bottom of a typical check represent all of the following except
Social Security number
Routing Number
Account Number
Check Number
What part of a check is the least important?
The check number
Signature line
Memo line
Routing number
What's the best strategy for voiding ATM fees
Only use ATMs close to your house
Only use ATMs to withdraw cash
Only use ATMs in your banks network
Only use ATMs you have used before
the best way to ensure the accuracy and safety of your accounts is to:
monitor your online accounts regularly
shred your paper account statements weekly
call your customer service center daily
balance your checkbook annually
Which of the following is a variable expense?
Student loan payments
Groceries
Rental payments
Health insurance
Which of the following is a fixed expense?
Clothing purchases
Groceries
Rental payments
Movie tickets
Which of the following is true?
Checks and Debit Cards both withdraw money directly from a bank account
Checks are the most widely accepted form of payment
Debit Cards often have a higher interest rate
Debit Cards offer the highest level of fraud protection
If you are planning to carry a large balance on your credit card, which of the following features should you look for?
Low APR
Low balance transfer fees
Lots of credit card rewards
A large credit limit
What is a credit limit
The required payment to your credit card company
The amount of interest you pay
The maximum amount you can charge each billing cycle
How many credit cards you can own
Which of the following can increase your credit card's APR
Paying the minimum
Missing a credit card payment
Paying off the full balance
Cashing in on rewards points
Which of the following statements about credit scores is TRUE?
a. Credit scores reflect how likely individuals are to repay their debts.
b. Credit scores range from the low 300’s to the mid 800’s.
c. Each person has three credit scores.
d. All of the above.
Which of the following actions has NO impact on your credit score?
a. You inquire about a credit card charge.
b. You use a large percentage of your credit limit.
c. You opened several new credit cards last week.
d. You send in your credit card payment a couple days late.
Good credit is usually required for which of the following:(Check all that apply)
buying a new car
adopting a new pet
getting a credit card
buying a house
buying used furniture
Which form is your employer required to send to you before you file your tax return?
Yearly paycheck stub
1040EZ
W-2
W-4
The regular payment for an insurance policy is called a:
co-payment
deductible
premium
claim
Which of the following provides the best protection against identity theft?
Never use a credit card
Open up a new bank account every year
Pay all bills with cash only
Shred documents that contain personal information
When buying a stock in a company, you are:
diversifying your portfolio
investing in an index fund
loaning money to a company
buying a portion of a company
The main trade-off that all investors must consider is:
income vs. cost
diversity vs. uniformity
stocks vs. bonds
risk vs. return
Which type of account is typically the most liquid?
Checking account
Savings account
Certificate of Deposit
Exchange Traded Fund
Savings accounts usually offer____ interest rates than checking accounts. It is ______ to access your money in a savings account than in a checking account
lower;harder
lower;easier
higher;harder
higher;easier
Which type of account will typically have the highest interest rate?
Checking account
Savings account
Money Market account
Certificate of Deposit
Which of these fees would likely be the highest
Overdraft fee
Account transfer fee
Monthly service fee
ATM fee
Which payment type can help you stick to a budget
Credit cards
Debit cards
Payday loans
Cash advances
Which of the following will happen if you miss a monthly credit card payment
You will be charged a late fee
You will lose reward points
Your APR will increase next month
Both A & B
Making a credit card minimum payment
Means you are paying a small portion of your total credit card debt
Is the same thing as making a late payment
Will have a negative effect on your credit score
Will cause your credit card to be cancelled
which of the following are true if you pay only the minimum amount each month
You will be charged interest
Your APR will increase
You may be in debt for a long time
Both A & B
Which of the following is the BEST way to protect against identity theft?
a. Discard old account statements weekly.
b. Use only local public access Wi-Fi.
c. Change online account passwords frequently.
d. Avoid emails from people who do not like you.
Which of the following scenarios might indicate that you have been a victim of identity theft?
a. Your credit report displays accounts you did not open.
b. You do not pay your credit card bill on time.
c. Both A and B
d. Neither A nor B
What is the safest way to dispose of old bank account statements?
a. Throw them out in a neighbor’s trash.
b. Shred them in a paper shredder.
c. Keep them bundled together in a folder.
d. Put them in the trash unopened.
Where could an identity theft access your personal information?
a. While on public WiFi at your neighborhood coffee shop.
b. From stored password data on your cell phone.
c. Both A and B
d. Neither A nor B
What activities might require you to provide your social security number?
a. Starting a new job.
b. Boarding an airplane.
c. Buying something with a credit card.
d. Renting a car.
Consumer protection laws are meant to:
a. Protect businesses from consumers.
b. Prevent unfair or deceptive business practices.
c. Protect consumers from spending too much money.
d. Prevent consumers from buying unnecessary items.
