WorksheetsFall Semester Exam (Ch 1-3)
Total questions: 55
Worksheet time: 2hrs 50mins
You should always make sure you have a...
Credit card
Credit line
Budget
Direct deposit
What is the first foundation?
pay cash for college
build wealth and give
open a checking account
save a $500 emergency fund
Personal finance is all the financial decisions a(n) ______ must make in order to earn, budget, save, spend, and give money over time.
individual or family
business
government
organization
Avoiding debt can lead to financial freedom and home.
True
False
After World War 1, the demand for products increased, and people began getting credit without loan sharks. Because of this, credit...
started to become more socially acceptable
was devalued in the marketplace
was offered at even higher interest rates by loan sharks
increased so rapidly, loan sharks became obsolete
A money principle to keep in mind is to live on _____ than you make.
less than
exactly 20% below what
more than
the same as
To know your net worth, subtract your liabilities from your _____.
assets
other liabilities
net income
previous net worth
What is the best way to avoid running out of money too quickly?
you can invest in college
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
An important money principle to consider is that you should _____ and _____ your money.
invest; endow
save; invest
spend; invest
invest; lay out
If your assets total more than your liabilities, you will have a(n) _____ net worth.
positive
unknown
equal
negative
When you set financial goals, they should be...
specific, measurable, time-sensitive, yours, and written
timely, bank-based, specific, and yours
specific and measurable
only time-sensitive
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
A _____ financial goal takes up to 2 years to reach.
long-term
medium-term
five-level
short-term
What is the 5th Foundation?
pay cash for your car
find a financial professional
build wealth and give
get out and stay out of debt
What is financial literacy?
expertise in investment banking
understanding and effectively using various financial skills
the ability to read financial statements
knowledge of global financial markets
What is a budget?
a plan for your money
a list of expenses
spending your money
going to the bank
Although the majority of Americans think budgeting is important, about _____ of Americans actually use a budget.
35%
50%
75%
23%
Which of the following is NOT a component of a budget?
saving
credit score
giving
income
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, shelter, and transportation
food, utilities, transportation, and college fund
How often should you create a budget?
monthly
biannually
daily
weekly
Detailed categories on your budget will help you make better spending decisions.
False
True
Research shows that nearly half of Americans (46%) feel stress and anxiety about the amount of _____ they have.
categories in their budget
personal debt
money
debit cards
Going to the movies is an example of what types of expenses?
discretionary and variable
intermittent and variable
discretionary and fixed
intermittent and fixed
Net income is the amount you get paid before taxes.
False
True
Why is tracking your expenses throughout the month important?
it allows you to delete categories you don't like
it helps you pull money from your savings to spend in other categories
it really isn't that important in the long run
it gives you insight into whether you're sticking to the budget you set
What kind of money counts as income?
only the money you make at your job
only money deposited into your bank account
all money that you receive, including money from your job and gifts like birthday money
money in your savings account
Commission is when you make money based on the percentage of _____.
total sales
budgets
investments
items sold
Your monthly rent payment is an example of a variable expense.
True
False
Which of the following best explains the difference between a fixed expense and a variable expense?
Both fixed and variable expenses remain constant each month.
A fixed expense can change each month, like groceries, while a variable expense remains constant, like a subscription service.
Both fixed and variable expenses change each month.
A fixed expense remains constant each month, like rent, while a variable expense can change, like utility bills.
Which of the following best describes irregular income?
Income that varies in amount and frequency
Income received at regular intervals
Income that is tax-free
Income that is fixed and predictable
Once you have a $500 emergency fund, you should...
Invest it in the stock market to grow your money
Start putting it toward debt
Save it until you have an emergency
Use the money to pay for health insurance
Why do some accounts, like savings accounts at your local bank, earn interest?
Because those accounts always have great interest rates
Because you deposit money, adding to your principal each month
Because of inflation
Because the bank pays you to use your money
Which 2 habits are the most important for building wealth and becoming a millionaire?
consistently investing money and giving it time to grow
working a high-paying job and relying on a trust fund
investing into the right stocks and using a private CPA
always paying off your credit card on time and putting extra money into a retirement account
The interest rate on a savings account determines...
how quickly your money will grow over time
how much you will pay the bank to manage the account
the amount of time your money will be in the account
how much money you need to have to open the account
_____ is a millionaire's best friend.
accrued interest
high returns
compound growth
profit sharing
What is the goal of an emergency fund?
to have cash on hand for unexpected events
to pay for health insurance
to save for your children's college expenses
to pay for large purchases
What is the 3rd Foundation?
save for retirement
pay cash for college
create a monthly budget
pay cash for your car
The amount of interest charged on a debt but not yet collected is called...
growth rate
compound interest
interest rate
accrued interest
Which of the following is an effective strategy for personal saving?
Cover all of your wants and needs and save whatever is left over
Take out a payday loan so you can save before you receive your paycheck
Wait until the end of the month and save whatever is left in your checking account
Save a certain percentage of each paycheck and deposit it directly into a savings account
What is the recommended percentage of income to save for retirement?
15
25
5
10
Definition: income that comes in at different amounts or at different times, or both.
irregular income
gross income
net income
variable expense
Definition: expense for things you don't need.
fixed
variable
intermittent
discretionary
A cash flow plan that assigns an expense to every dollar of your income, wherein the total income minus the total expenses equals zero.
zero-based budget
net income
irregular income
variable expense
The amount you earn before taxes and other payroll deductions.
gross income
variable expense
irregular income
net income
The measure of an investment's profit or loss, usually expressed as a percentage of the initial investment.
compound interest
interest rate
time value of money
rate of return
The average rate of growth for an investment over time; often expressed as an annual figure
compound interest
inflation
compound growth
interest rate
The initial amount of money invested or borrowed
compound interest
inflation
principle
interest rate
The persistent rise in the cost of goods and services over time
recession
time value of money
compound growth
inflation
Interest paid on interest previously earned
inflation
compound interest
interest rate
compound growth
What is the primary benefit of having a diversified investment portfolio?
It ensures tax-free income.
It guarantees high returns.
It eliminates the need for a financial advisor.
It reduces risk by spreading investments across various assets.
Which of the following is a key characteristic of a good budget?
It is flexible and can be adjusted as needed.
It is rigid and cannot be changed.
It is created once and never reviewed.
It only includes fixed expenses.
What is the main purpose of setting up an emergency fund?
To invest in high-risk stocks.
To lend money to friends and family.
To pay for luxury vacations.
To cover unexpected expenses without going into debt.
What is the primary purpose of a budget?
To track your spending habits
To avoid paying taxes
To plan for future expenses and savings
To ensure you spend all your income
Which of the following is considered a fixed expense?
Entertainment
Rent
Groceries
Clothing
What is the benefit of having an emergency fund?
To invest in high-risk stocks
To cover unexpected expenses without going into debt
To buy luxury items
To pay off credit card debt
