WorksheetsMoney Management - Personal Finance Unit 4 Review
Total questions: 48
Worksheet time: 2hrs 24mins
Which of the following is NOT true about financial planning?
Effective financial planning helps you accomplish your goals
Financial planning never ends, it is a continuous process
Effective financial planning will help you stay out of debt
Your financial strategies may change throughout life
Which of the following is NOT part of the money management process?
Knowing your current financial position
Knowing where your money is coming from and where it is spent
Changing your spending habits to meet your goals
Following the financial strategies of your friends and family
Heather and Veronica are talking about their family’s stocks, real estate, furniture, vehicles, and collectibles. They are most likely talking about:
Their family’s assets
Their family’s net worth
Their family’s liabilities
Their family’s income
What is the difference between income and wealth?
Income is money earned from work and wealth is assets minus debt
Income is money earned from work and wealth is the value of all your assets
Income is the value of all your assets and wealth is your income
Income and wealth are the same thing
Which of the following is true about a Statement of Financial Position?
It is a document used to check your financial condition today
It is a document used to record income and expenses in the past
It is a document used to determine income and expenses for the future
It is a document used to calculate your taxes
Jordyn is creating a Statement of Financial Position. Which of the following best describes her net worth?
All of her assets minus all of the liabilities she has.
All of her money plus the value of her possessions.
How much money she is paid minus her expenses
How much money she has, including her paycheck
What is net worth?
All of the money you have plus the value of all your possessions
A number that indicates your financial condition
A number that affects your ability to take loans and make large purchases
A number that indicates how much debt you have
Jonah bought a car for $14,500 several years ago but the value of the car is now $ 6,700. Where would he put his car on his statement of financial position and how much?
Liability for $14,500
Liability for $6,700
Tangible asset for $14,500
Tangible asset for $6,700
Rachel is creating a Statement of Financial Position. She currently has a student loan that she pays $230 a month. The full amount of the loan will be $98,000 but if she were to pay it off all today, that amount is only $54,000. Which number does she put on her Statement of Financial Position?
$230 because that is what she pays
$98,000 because it is the full amount she owes
$54,000 because it is what the loan is if she paid it off today
$44,000 because that is the amount remaining
To increase his net worth, Jackson could
Increase his liabilities
Decrease his assets
Increase his market value
Increase his assets
What is the difference between a liability and an expense?
A liability is something that you spend money on regularly and an expense is how much an item costs
A liability is an asset that could be dangerous or harmful and an expense is something that you spend money on regularly
A liability is a debt or obligation owed to others and an expense is something that you spend money on regularly
Liabilities and expenses are the same thing
Which of the following is a non-contractual expense?
Rent or mortgage payment
Food
Cellphone bill
Student loan payment
Which of the following is a contractual expense?
Fuel
Clothing and personal care items
Utility payment
Gifts for others
Which of the following payment options requires you to track purchases by hand?
Cash
Debit Card
Credit Card
Check
Which of the following is NOT a good habit for tracking your purchases?
Regularly check your bank statement
Hold on to receipts
Compare your records with the banks and report any errors
Use many different apps and lists to track purchases throughout the month
How do you deposit or cash a check?
Take the check to your depository institution and show photo ID to prove it goes to you
Sign the back of the check and then take it to your depository institution
Take the check to any depository institution and they will transfer the funds
You do not have to do anything, the person making the check will have the funds transfer to you
Which of the following is NOT true about autopay?
You need to have an account with a depository institution to set up autopay
You need to set up autopay before the due date of your next payment
You will need to adjust your autopay option every year
You should still check with your depository institution to ensure that autopay payments were successful
Which of the following is true about an Income and Expense Statement?
It is a document used to check your financial condition today
It is a document used to record income and expenses in the past
It is a document used to determine income and expenses for the future
It is a document used to calculate your taxes
Why is it important to create an Income and Expense Statement?
You can see your net worth and how wealthy you are
You can determine where you should be spending your money based on the income you have
You can see a record of your expenses in the past and set financial goals based on that record
It is not important to create an Income and Expense Statement
Why is it important to keep a written record of your financial condition, income, and expenses?
You do not want other people accessing it online
It provides an accurate record that you can refer back to
Writing your financial information down means you remember it more
It is not important to keep a written record, mentally tracking your finances is fine
When is savings considered an expense and when is it considered income?
Savings is an expense when money is put into an account and income when taken out
Savings is never considered an expense
Savings is never considered income
Savings is an expense when the money is used to pay for transactions and income when it is going into an account
Which of the following is considered earned income?
Money from selling assets
Money from workers’ compensation
Money from commissions, tips, or bonuses
Money from interest on savings accounts
Which of the following is considered unearned income?
Money from selling assets
Money from wages or salary
Money from tax refunds
Money from federal student loans
Nathan is making an income and expense statement and doesn’t include expenses that he paid with in cash because he had the money already in his wallet. What is the best response to his thinking?
It depends on how much he is spending – if it’s less than $50 then he doesn’t need to record the expenses
He should still record the expenses because they are part of his spending
He should record the expenses if they are something that he pays for regularly
It is correct thinking
Amanda and Marcus just finished their Income and Expense Statement for last month. They discovered that they have a net gain. What does this mean and what should they do?
Amanda and Marcus are spending more money than they are earning. They need to find a way to balance their income and expenses by spending less on non-contractual expenses
Amanda and Marcus are earning more money than they are spending. They could place additional money in savings and/or spend it on other expenses
Amanda and Marcus are spending more money than they are earning. One of them should consider getting a second job for a time to help boost their income
Amanda and Marcus are earning more money than they are spending. They should increase spending for non-contractual items to bring their income into balance with their expenses.
Ethan spends $1.50 per day to get a soda from the vending machine. He doesn't record this expense because he believes that $1.50 isn’t a lot of money so it won’t affect his finances much. What is the best response to his thinking?
It is correct thinking
Small expenses add up so you should be recording all expenses
It depends on how often he gets the soda. If the expense is less than $50, he doesn’t need to keep track of it
As long as he is paying in cash, he doesn’t need to record the expense
Which of the following is true about a Spending Plan?
It is a document used to check your financial condition today
It is a document used to record income and expenses in the past
It is a document used to determine income and expenses for the future
It is a document used to calculate your taxes
Which of the following is NOT a step in developing a spending plan
Track your current income and expenses
Personalize your spending plan and allocate the money to each category
Monitor and follow your budget as much as possible
Make sure you follow the budget with no changes every month
What does it mean to “Pay Yourself First”?
Set aside money for savings and investing before spending money on anything else
Set aside money for things you enjoy before spending money on anything else
Set aside money for your known expenses before spending money on anything else
Set aside money for contractual expenses before spending money on anything else
Which of the following groups of expenses best represents contractual expenses?
Rent, Utilities, Credit & Loan Payments
Credit & Loan Payments, Entertainment, Clothing
Entertainment, Food, Subscriptions
Cellphone Bill, Subscriptions, Food
Which of the following groups of expenses best represents non-contractual expenses?
Rent, Utilities, Credit & Loan Payments
Credit & Loan Payments, Entertainment, Clothing
Entertainment, Food, Subscriptions
Cellphone Bill, Subscriptions, Food
If expenses were to exceed income on a spending plan, what would be a financially smart solution?
Decrease expenses
Use a credit card more often
Earn less income
Increase purchases
When is the spending plan process complete?
When you have allocated all your income into categories for the month
When you have all of your current income and expenses recorded
Spending plans are always under revision so they are never complete
Spending plans are complete each December 31st as one year ends so another begins
Which of the following best describes the 50/30/20 rule for budgets?
50% of income goes to savings, 30% to needs, and 20% to wants
50% of income goes to wants, 30% to needs, and 20% to savings
50% of income goes to needs, 30% to savings, and 20% to wants
50% of income goes to needs, 30% to wants, and 20% to savings
Which of the following is NOT a way to control your spending?
Cancel all subscriptions you do not use on a regular basis
Purchase everything you want immediately so that you won’t have as much to buy later
Make a meal plan and cook at home
Compare and research products and save up the cost before buying
Lindsey is looking to buy a dish washer for her house. She finds one online that costs $1,650. Lindsey thinks this is too expensive even though she could buy it now. What is the best advice to give her?
Buy it now because she is looking for one and has the money for it.
Use a credit card or finance the purchase so she can pay back the amount over time
Continue looking online and in in-person stores to see if she can find a better deal and save for the purchase
Use money from her savings account to buy the dishwasher now
Joel is out grocery shopping and sees that the video games are 20% off. He sees two games that he would really like but can only afford one of them. He is having a difficult time choosing which game to buy. What is the best advice to give him?
Buy both games now because they are on sale
Buy the newer game because he can likely find the other one cheaper elsewhere
Flip a coin and buy the game that wins the coin toss
Buy neither and wait until he has budgeted to buy the games
Chaise has trouble when shopping. Every time he goes shopping, he tends to spend anywhere from 50to 100 more than he had anticipated. What is the best advice to give him?
Use a list when shopping and only buy items from the list
Use online shopping options so that he can see what the cost is before checking out
Use order filling services so that the person picking his items won’t add extra items
Shop at a discount store so he can still spend extra but it won’t be as much
What is the recommended debt limit for non-housing debt?
10%
15%
20%
28%
Why is it important to pay off debts quickly?
Once debts are paid off, you can more effectively build a savings fund
Once debts are paid off, you can take on new liabilities to increase your net worth
Once debts are paid off, your credit score will improve by 100 points
Once debts are paid off, you can sell assets that were tied to the debt to increase your net worth
Mason is ranking his debts to develop a debt payment plan. He wants to eliminate the debts that will accrue more interest first. How should Mason rank his debts and why?
He should rank housing, vehicles, and utilities first because they directly affect his daily needs and have assets attached to them
He should rank student loans, credit cards, and medical bills first because they tend to have higher interest rates and are pure liabilities
He should rank housing, vehicles, and utilities first because they tend to have higher interest rates and are pure liabilities
He should rank student loans, credit cards, and medical bills first because they directly affect his daily needs and have assets attached to them
Savannah is ranking her debts to develop a debt payment plan. She wants to focus on eliminating debt that affect her living conditions and lifestyle first. How should Savannah rank her debts and why?
She should rank housing, vehicles, and utilities first because they directly affect his daily needs and have assets attached to them
He should rank student loans, credit cards, and medical bills first because they tend to have higher interest rates and are pure liabilities
He should rank housing, vehicles, and utilities first because they tend to have higher interest rates and are pure liabilities
He should rank student loans, credit cards, and medical bills first because they directly affect his daily needs and have assets attached to them
Gaige is working on paying off his debts. He has decided to pay off debts that have large balances and directly affect his daily needs. In an effort to save money, Gaige is also ignoring debts such as his student loan and small medical debts. What is the best advice to give Gaige?
He should still consider his student loan and medical debts and then work to pay off his debts based on the largest balance
He should still be paying the minimum balance on his other debts or seek credit counseling to avoid fees, high interest, and possible lawsuits
He should still be paying his student loan and medical bills otherwise he could lose his degree and be denied medical care
Gaige’s thinking is fine since he already has his degree and been given medical care
Stacey is creating a debt paydown plan. She is very motivated by success and feeling accomplished. She feels overwhelmed because of the debts she has. What paydown plan would you recommend to Stacey?
The avalanche method because she’ll be saving more money by paying off debts with high interest first
The snowball method because she’ll be seeing debts eliminated quickly by paying off debts with the smallest balance first
The snowflake method because she’ll be able to make additional payments with unexpected money and see the debts decrease faster
The icicle method because she’ll focus on one debt and see its balance drop quickly
Baxter is creating a debt paydown plan. He is very concerned about his debts getting out of control with larger and larger balances every month and wants to be able to save money. What paydown plan would you recommend to Baxter?
The avalanche method because she’ll be saving more money by paying off debts with high interest first
The snowball method because she’ll be seeing debts eliminated quickly by paying off debts with the smallest balance first
The snowflake method because she’ll be able to make additional payments with unexpected money and see the debts decrease faster
The icicle method because she’ll focus on one debt and see its balance drop quickly
Which of the following is NOT a benefit of working with credit counselors?
They can negotiate lower minimum payments with your creditor
They can negotiate extended time to pay off debts with creditors
They can help you develop ways to avoid going into debt
They can guarantee that debts will not go to collections
Jessica makes $2,300 a month as net income and is looking to buy a new car. She has option X that would have a monthly payment of $280 and another option Y that has a monthly payment of $190. She is currently paying off a student loan that has a monthly payment of $255. Which option should Jessica go with?
Option X because it is within her 20% recommended debt limit
Option Y because it keeps her within her 20% recommended debt limit
She could buy either X or Y and still be within her 20% recommended debt limit
She should buy neither because both go over her 20% recommended debt limit
A credit counselor that Ariel consulted about her use of credit recommended that Ariel keep her use credit within safe boundaries. Ariel’s credit counselor most likely told her to:
Keep the total amount of money she has borrowed, including her mortgage and car loan, under 20% of her net income
Keep the total amount of money she has borrowed, including her mortgage and her car loan, under 40% of her net income
Keep the total amount of money she has borrowed, not including her house, under 20% of her net income
Keep the total amount of money she has borrowed, not including her house, under 40% of her net income
