WorksheetsUnit 1 Test
Total questions: 55
Worksheet time: 28mins
Making the right choices with your money—managing your money—involves knowing how . . .
Planning, saving, spending, and investing will define your financial portfolio
To make bank deposits using registers with the appropriate transactions listed
Consumer decisions will affect your accounts
Earning, budgeting, saving, spending, and giving affect your money
Banks got into the credit business before 1920 because charging exceptionally high interest rates was legal.
True
False
You should always make sure you have a...
Budget
Credit line
Direct deposit
Credit card
What is The First Foundation?
Pay cash for college.
Build wealth and give.
Save a $500 emergency fund.
Open a checking account.
Being a spender has many more positives than being a saver.
True
False
Personal finance is all the financial decisions a(n)__________ must make in order to earn, budget, save, spend, and give money over time.
Company or organization
Individual or company
Bank
Avoiding debt can give you financial peace and a sense of hope for the future.
True
False
A money principle to keep in mind is to live on ______________ you make.
More than
The same as
Less than
To know your net worth, subtract your liabilities from your .
Other liabilities
Net income
Previous net worth
What is financial literacy?
The content provided in bank statements for consumers
The knowledge and skill base necessary for people to be informed consumers and manage their finances effectively
The curriculum provided to college students about finances for their degrees
The skills to read financial documents for personal finance classes, goals, and statements
What is the best way to avoid running out of money too quickly?
You can make it a habit to plan and set goals for your money.
You can avoid making any purchases for the next 30 days.
You can put your money in a safe place, like a bank, and not spend it.
You can invest in college.
It is possible to pay for college with cash.
True
False
Franklin D. Roosevelt passed the New Deal because of the Great Depression in the 1930s. What was the purpose of this program?
To promote economic recovery and social reform
To create a borrowing system within the country
To alleviate financial concerns with the United Nations
To divide the national budget in half and distribute it
If your assets total more than your liabilities, you will have a(n) ___________ net worth.
Negative
Equal
Unknown
What are The Five Foundations?
A personal financial action plan
A starting point for adults regarding finances
A financial literacy technique
A common conclusion for debt
Your money personality impacts . . .
Your understanding of bank transactions
How you handle money
Your financial literacy level
What you plan for as an adult
Using credit has not always been a socially accepted practice, but it has become . . .
Less acceptable
A practice used by the wealthy
Necessary for life in America
Normal in American culture
29. A financial goal takes up to two years to reach.
Five-level
Medium-term
Long-term
What is The Fifth Foundation?
Pay cash for your car.
Get out and stay out of debt.
Find a financial professional.
Build wealth and give.
Personal finance is dependent upon your behavior because:
your decisions and actions determine your financial outcomes.
it is only affected by external economic factors.
it relies solely on how much money you earn.
it is controlled by government policies.
Assets and liabilities are connected to net worth in the following way:
Net worth is calculated by subtracting liabilities from assets.
Net worth is calculated by adding assets and liabilities together.
Net worth is the same as total assets.
Net worth is the same as total liabilities.
Financial literacy is:
the ability to understand and manage personal finances effectively.
the study of historical events.
the process of learning a new language.
the practice of physical exercise.
Being aware of whether you are a saver or a spender is important because:
It helps you make better financial decisions.
It guarantees you will become wealthy.
It prevents you from ever spending money.
It means you never need a budget.
Although the majority of Americans think budgeting is important, about _______ of Americans actually use a budget.
75%
50%
23%
35%
Which of the following is NOT a component of a budget?
Credit score
Saving
Income
Giving
Online budgeting apps are more effective than budgeting with pen and paper.
True
False
What are the Four Walls?
Utilities, college fund, restaurants, and car insurance
Cell phone bill, car insurance, shelter, and money for the movies
Food, utilities, transportation, and college fund
Food, utilities, shelter, and transportation
How many categories should you have in your budget?
15 or more
No limit; use as many as you need to keep your budget accurate!
No more than 10
At least 3
How often should you create a budget?
Daily
Weekly
Monthly
Biannually
If you get married, only one person is responsible for budgeting.
True
False
What does a budget show you?
How much you need to save
How much money you plan to come in and go out during the month
How much money you need to earn
How much money you spent last month
Detailed categories on your budget will help you make better spending decisions.
True
False
A budget says what will happen with your money, while a cash-flow statement shows what already happened.
True
False
How many months does it usually take for your budget to start working as a budget should?
Three
Five
Four
One
Your money personality can affect your .
Choice of bank
Personal values
Ability to budget
Research shows that nearly half of Americans (46%) feel stress and anxiety about the amount of they have.
Debit cards
Categories in their budget
Personal debt
Going to the movies is an example of what types of expenses?
Intermittent and variable
Discretionary and variable
Discretionary and fixed
Intermittent and fixed
Net income is the amount you get paid before taxes.
True
False
Why is tracking your expenses throughout the month important?
It allows you to delete categories you don't like.
It gives you insight into whether you're sticking to the budget you set.
It helps you pull money from your savings to spend in other categories.
It really isn't that important in the long run.
What kind of money counts as income?
Only the money you make at your job
All money that you receive, including money from your job and gifts like birthday money
Money in your savings account
Only money deposited into your bank account
What is a way to stay accountable to reaching your financial goals?
Finding a person you trust to help keep you on track with your money goals
Hiring a financial advisor to make your decisions about money for you
Looking at the budget you set at the end of the month
Creating specific categories in your budget
A common misconception is that budgeting will keep you from having fun, when in reality a budget . . .
Adds more stress to your life
Means there are no rules—you are free to use your money however you want
Restricts your fun completely
Gives you permission to spend
The first priority in your budget should be ______.
Giving
Spending
Saving
Investing
When is the right time to start creating and living by a budget?
Right now - it's never too early!
When you start researching colleges and the costs that come along with it
Once you have a job with an income
When you decide it's time to buy a car
What should you do if you overspend in one category of your budget?
Adjust your budget by removing money from other spending categories.
Just leave it. It will probably work out fine.
Take money from the Giving category. You're giving to yourself!
Ask a friend for the money you overspent.
The primary reason people don't budget is because they lack the behavior to stick to a budget.
True
False
Your monthly rent payment is an example of a variable expense.
True
False
The best way to budget is...
By using a digital app
Creating a spreadsheet
The way that works best for you
On paper
What is the envelope system?
It's a method of budgeting that uses envelopes labeled with specific budget categories for your cash.
It's a systematic approach to budgeting with a digital app that organizes categories based on qualitative amounts.
It's a way to budget that involves putting a credit card in each envelope to use for that category.
It's a system that involves writing your entire budget on an envelope.
If you have an irregular income, budgeting won't work for you.
True
False
Why is budgeting so important?
It's a good way to make sure all your money is spent by the end of the month.
It helps you figure out the best way to justify purchases that maybe aren't necessary.
It gives you control of your money and sets you up for financial success in the future.
It helps you brush up on your math skills.
The Four Walls are essential categories in your budget. Which of the following lists them correctly and states their priority?
Food, Utilities, Shelter, Transportation; They are the top priority in your budget.
Entertainment, Travel, Savings, Clothing; They are the lowest priority in your budget.
Investments, Insurance, Subscriptions, Dining Out; They are the top priority in your budget.
Gifts, Vacations, Electronics, Hobbies; They are the top priority in your budget.
Key components of successful budgeting include:
Setting financial goals, tracking expenses, creating a spending plan, and reviewing progress
Ignoring expenses, spending impulsively, and avoiding financial planning
Relying solely on credit cards for all purchases
Focusing only on income without tracking expenses
Irregular income refers to earnings that are not received on a consistent schedule. Which of the following is an example of irregular income?
Freelance payments received at different times
Monthly salary from a full-time job
Weekly allowance from parents
Fixed pension received every month
A budget is considered a zero-based budget when:
every dollar of income is assigned a specific purpose until nothing is left unallocated.
expenses are estimated based on the previous year’s spending.
savings are prioritized over all other expenses.
only fixed expenses are included in the budget.
