question

Which of the following best explains why students should learn about personal finance?

answer

Learning to manage money at this stage can eliminate financial mistakes and promote huge financial benefits for the future.

question

Key components of financial planning include all of the following except:

answer

Allow your financial planner to make all of your major money decisions.

question

Which of the following statements best describe how Americans are being outsmarted by banks and other lenders?

answer

Credit is marketed so well that we desire to have it while completely dismissing the fact that interest rates and fees continue to destroy our financial well-being.

question

Personal financial success is primarily the result of:

answer

Managing your money behavior.

question

Which of the following statements best explains why income alone does not determine wealth?

answer

How much money a person makes does not dictate his or her spending and saving behavior.

question

Which of the following is a consequence of spending more than you make?

answer

Missed opportunity to save and invest, stress, a cycle of debt, ALL OF THE ABOVE

question

Which of the following is not a true statement?

answer

The credit industry in America has not changed much since 1917.

question

Whent it comes to managing money, success is about __% knowledge and __% behavior.

answer

20, 80

question

The widespread financial insecurity of Americans is probably because

answer

The savings rate of Americans is low and many borrow in order to spend more than they earn.

question

Which of the following is not a factor in becoming money smart?

answer

Learn how to read your credit card statements.

question

Which of the following is not a benefit of understanding your own money personality?

answer

Knowing your money personality allows you to excuse excessive spending because it is simply part of your nature.

question

Why was the use of credit uncommon prior to 1917?

answer

Laws prevented lenders from charging high interest rates, borrowing money was generally not socially acceptable, lending money to others was not profitable, ALL OF THE ABOVE

question

When it comes to personal finance, the math is easy. What's challenging is managing your

answer

behavior

question

Which of the following is not a reason credit is marked heavily to consumers in the United States?

answer

The use of credit is not socially accepted in the United States.

question

During the Great Depression, New Deal policymakers came up with mortgage (home loans) and consumer lending policies that convinced commercial banks that:

answer

Consumer credit could be profitable

question

True financial security is achieved when your money begins to generate an income--your money starts working for you.

answer

True

question

Since you are a teenager, what you do now with money will have little effect on your financial future.

answer

False

question

Most Americans today are wealthy and will have financial security when they retire.

answer

False

question

Most Americans avoid the use of credit when it comes to buying big-ticket items like a car or furniture for their home.

answer

False

question

Learning the language of money is not that important because you will be able to depend on financial planners to manage your money.

answer

False

question

Having debt keeps you from building wealth.

answer

True

question

The credit system today is structured to accommodate a state of uncertain employment and income instability, utilizing high interest rates and fees to turn huge profits.

answer

True

question

Expensive houses and new cars are a true indication of wealth.

answer

False

question

When developing a personal financial plan, one of the first things you should do is assess your current financial situation. This includes your income, assets, and liabilities.

answer

True

question

Everyone should have the same financial plan. A budget that works for one person should be sufficient for everyone.

answer

False

question

Explain why understanding your money personality is important when it comes to developing a money plan that's right for you.

answer

Savers will generally have less work to do and won't need as much discipline as spenders, who will have to slowly ween themselves off of their disdainful habits.

question

Explain how marketing can affect your decision when it comes to spending money.

answer

Marketing affects where and how we spend our money through advertisements; it can encourage us to buy now and pay later.

question

Describe some of the mistakes Americans often make when it comes to money.

answer

Lack of budgeting, overspending, relying on credit.

question

Does managing your money well mean that you can't have fun with your money?

answer

No; you can always budget some money for fun activities.

question

A person or business that offers loans at extremely high interest rates

answer

loan shark

question

A person or organization that uses a product or service

answer

consumer

question

An obligation of repayment owed by one party to a second party

answer

debt

question

The granting of a loan and the creation of debt; any for of deferred payment

answer

credit

question

The knowledge and skill set necessary to be an informed consumer and manage finances effectively

answer

financial literacy

question

A fee paid by a borrower to the lender for the use of borrowed money

answer

interest

question

A system by which goods and services are produced and distributed

answer

economy

question

A debt evidenced by a "note," which specifies the principal amount, interest rate, and date of repayment

answer

loan

question

A period of temporary economic decline during which trade and industrial activity are reduced; generally identified by a fall in a gross domestic product

answer

recession

question

All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc.

answer

personal finance

question

The saving habits of Ben and Arthur best illustrate which principle of saving?

answer

The length of time money is invest matters, rate of return matters, BOTH A AND C

question

Which of the following is not one of the three basic reasons for saving money?

answer

Have money available to lend to friends

question

Instead of borrowing money for large purchases, you should set money aside in a ____________ over time and pay with cash.

answer

Sinking fund

question

Using the sinking fund approach, how much do you have to save each month to buy a $4,800 car one year form now?

answer

$400

question

What does it mean to have a negative savings rate?

answer

Spending more money than you make and acquiring debt.

question

Which of the following is a reason that people don't save money?

answer

They lack discipline, they do not live on a budget, they lack focus, ALL OF THE ABOVE

question

Which of the following steps is the First Foundation?

answer

Save a $500 emergency fund

question

Why should interest earned not be a factor with your emergency fund?

answer

The emergency fund is not intended to grow wealth

question

At your age, a fully funded emergency fund should be

answer

$500

question

Which of the following is not a reason your emergency fund should be kept in a separate savings account away from your spending money?

answer

So that your emergency fund savings can earn a lot of interest

question

This principle suggests that a certain amount of money today has different buying power than the same amount of money in the future. This is due to both the opportunity to earn interest on the money and because inflation will drive prices up, thereby changing the "value" of the money.

answer

Time value of money

question

For which of the following should you save

answer

Purchases, wealth building, emergency fund, ALL OF THE ABOVE

question

Which of these is not a key to saving money?

answer

Your income

question

Why is having a fully funded emergency fund so important when it comes to your financial well-being?

answer

The purpose of an emergency fund is to set money aside for unexpected financial emergencies and to provide a sense of financial security.

question

Saving is about:

answer

Contentment and emotion

question

You should keep your emergency fund in the same account as your spending money.

answer

False

question

The first thing you should ave for is your retirement fund.

answer

False

question

You should hold off on investing for retirement until you have college or other post-secondary education paid for.

answer

True

question

When it comes to saving money, the amount you save is determined by how much you have left at the end of the month once all of your spending is done.

answer

False

question

Americans typically maintain a very high savings rate.

answer

False

question

When you're older and out of school, you'll need to grow your emergency fund into a full three to six months' worth of expenses.

answer

True

question

An interest-bearing account is an account that generates interest income on the available balance in the account.

answer

True

question

You should save money for three basic reasons: emergency fund, purchases, and wealth building.

answer

True

question

Your income level greatly affects your saving habits.

answer

False

question

When you're in high school, you won't have the same emergency expenses as your parents.

answer

True

question

Why do you need an emergency fund at your age?

answer

So we can "fix a flat or replace a cell phone."

question

What two things do you consider when evaluating the time value of money?

answer

Interest and inflation

question

Explain why establishing

answer

...

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