WorksheetsCH 1 Pre Test
Total questions: 15
Worksheet time: 8mins
Why is financial planning important?
It guarantees wealth
It provides direction for financial decisions
It reduces the need to budget
It ensures you never face financial setbacks
What is financial planning?
Simply tracking monthly expenses
Predicting the stock market with precision
A structured process for setting and working toward money goals
Building wealth without considering risks
If you start saving $100/month at 20 vs 40, what happens?
Both choices produce the same outcome if invested aggressively
Saving at 40 is just as effective if you save the same amount
The starting age makes little difference if interest rates are low
Saving at 20 results in significantly more due to compounding
What does “time value of money” mean?
Waiting increases the value of money
A dollar today can grow if invested, making it worth more than a dollar later
Money and time are unrelated concepts
Money only changes value during recessions
1,000todayvs 1,000 in 10 years. Smarter pick?
Doesn’t matter - both are equal if interest rates are zero
In 10 years - because it feels more valuable later
Today - because it can be invested to earn returns
In 10 years - because future money has more purchasing power
What are opportunity costs?
The cost of borrowing money
The hidden fees in a purchase
Any unexpected financial charge
The value of the next best alternative you give up
Which is an opportunity cost?
Watching Netflix instead of studying
Buying an iPhone instead of saving for a car
Spending on fast food instead of saving for emergencies
All of these are examples
If interest works for you = ______. Against you = ______.
Inflation / Deflation
Investing / Avoiding expenses
Retirement growth / Loan forgiveness
Growing savings / Increasing debt burdens
Which best shows financial planning?
Using credit cards without a plan
Hoping for lottery winnings to pay bills
Setting goals for college, transportation, and retirement with timelines
Avoiding all long-term planning
If money could talk, what would it say?
“Use me as a tool to reach your goals.”
“Spend me now before I lose value.”
“I should always be kept in cash.”
“I disappear without your control.”
What does “compound interest” do?
Allows money to grow by earning interest on interest
Only applies to savings accounts
Increases debt balances if ignored
Works only when interest rates are high
Which is an example of short-term goal?
Paying off a mortgage over 30 years
Saving for retirement in 40 years
Building an emergency fund within 6 months
Buying a home in 15 years
If you buy $200 shoes, the opportunity cost might be:
A coupon that expired
A discount you didn’t use
Returning the shoes for store credit
$200 not added to your savings or investments
What’s a benefit of financial planning early?
It makes financial mistakes impossible
It guarantees you will be rich
It allows compound growth over more years
It eliminates the need for insurance
The “latte factor” is about…
How small daily expenses can add up to large long-term costs
A financial model for coffee businesses
A budgeting rule only for young adults
Buying coffee as an investment strategy
