Principles of Financial Planning – Flashcards
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Planning to finance higher education helps people prepare for their financial future because it teaches them about
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funds management and loans.
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_____ are items such as utilities, rent, and food—items that one can't do without.
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Needs
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In personal finance, what is considered a need?
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something one cannot live without
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In American society, which of these is an example of a want?
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television
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To assess risk and return involved in a purchase decision, which practical questions should a potential buyer ask? Check all that apply.
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What can go wrong?
What is the likely return?
Is the risk worth the return?
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Which results are more likely for someone without personal finance skills? Check all that apply.
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higher tax rates
less preparation for emergencies
increased long-term challenges
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Personal finances encompass an individual's
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assets.
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A ___ is a plan in which an individual balances available resources and expenses.
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budget
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Which of these is the most significant item that personal finance skills can affect?
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one's quality of life
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What term describes using assets to accomplish a goal in the present?
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spending
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Which best describes what financial planning skills ultimately enable an individual to do?
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to prepare for the future
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The cost of a decision is also known as a(n)
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opportunity cost.
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Which of these is the best example of successfully managing a financial asset?
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opening a new savings account
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How do long-term goals differ from short-term goals?
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Long-term goals require more patience than short-term goals do.
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Which would be most helpful when considering a large expenditure that might require repeating payments?
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creating a budget to consider future income and spending
