personal finance unit test

Which question would you answer while establishing your net worth in the budgeting process

How much money do I have in the bank now

Buildings in land that an individual owns are examples of

Real estate

what is the best description of a financial plan

a good financial plan is a blueprint for a builder

If financial playing with a higher level of risk is likely to also have ________ Then a financial plan with a lower level of risk does.

a higher potential payoff

current and long term liabilities represent what

a persons total debt

what is an accurate financial statistic about teens 12-17

about 40% of teens having a savings or checking account in their name

it is most important for your financial goals to be

achievable

Retirement planning involves determining how much to save for retirement every year _______ and hoe to invest that money

as early as possible

Net worth is determined by subtracting in individuals liabilities from his or her

assets

__________ Or anything we are in such as a car or home

assets

you can increase your net worth by increasing your _______ and/or decreasing your

assets; liabilities

Credit card financing is usually available _________ a borrower Then longer-term financing for major purchase is

at a higher cost to

A(n) ________ is a promise to repay a certain amount of money at some future time

bond

A ________ Can help you save money for major purchases, unexpected expenses, unexpected opportunities

budget

After all of her expenses, Sarah Beth simply has $100-$150 left over each month. Sarah Beth wants to decide how to spend the surplus. What tool would help Sarah Beth the most

budget; personal balance sheet

The process of forecasting future expenses and incomes is called

budgeting

to make a financial forecast it is most important to evaluate and make predictions about your _______

cash flows

For individuals, _______ is referred to as income

cash inflow

money that an individual spends is referred to as _______

cash outflow

Andrew wants to forecast his monthly profit From his job at the movie theater. He should calculate his profit by subtracting his _________ from his _________

cash outflow; cash inflow

what would be the most likely to do as part of the last step of the financial decision-making process

change aspects of your financial plan that have not been working

when you use ________, you are borrowing money

credit

the most common form of current liability for individuals is a ________

credit card balance

when a lender analyzes how likely you are to pay back a loan, the lender is determining your ________

creditworthiness

you should use a credit card as a(n) __________, not a(n) _________

current liability; long term liability

lenders often use the ___________ ratio to determine whether someone has enough wealth to repay debt

debt to asset

What refers to the amount of an asset that a person owns

equity

what is the most important to creating a successful financial plan

establishing clear goals

before you can effectively make plans for your financial future, you need to ________

evaluate your current financial position

Money spent on a vacation or birthday is an example of a(n) _________ Expense I will not show up in a typical months budget

expected but irregular

A(n) ________ is anything that abs individual spends money on

expense

taking a loan out to pay for a portion of a major purchase, such as a car or a house, is known as ________ the purchase

financing

A(n) __________ expense is an expense that remains the same from time period to time period, often month to month

fixed

after keeping track of his income and expenses for two months, Ellis made predictions about his monthly cash inflows and outflows for the next year. Ellis made a(n)

forecast

the difference between what you forecast to happen and what actually happened is referred to as __________

forecast error

For you as consumers under 25 years of age what is the smallest annual expense

health care

Christine is creating a Personal Balance Sheet has begun classifying her assets what should Christine classify as a liquid asset

her checking account

the car you own and drive regularly is an example of a(n) ________

household asset

to figure your personal balance sheet, you would need to conduct research to estimate the market value of your

household assets

for most US consumers the biggest expense is

housing

After you have a evaluated your current financial situation and made a financial forecast what should be your next step

identify options for accomplishing your goals

having a(n) _________ Is the major means by which an individual saves money, builds wealth, and acquires assets

income

savings accounts, scholarships, and jobs are all potential sources of _______

income

wages earned and allowance are two types of

income

A good way to think about ______ is as rent on money borrowed

interest

A(n) ________ is something that you acquire with the ultimate goal of making money

investment

Stocks, bonds, mutual funds, and real estate are all common types of ______

investments

in the typical budget, money for _______ tends to be money remaining after paying necessary bills

investments

your financial goals are most directly tied to your income, your ________, and your choice of career

level of education

_________ Or anything we owe or our debts

liabilities

If you findThat you don't have enough money to cover your immediate needs, then you need more

liquidity

The amount of money you have left over each month is most directly related to your plans to manage _________

liquidity

deciding how much money to keep in checking account and in a savings account is part of a(n) ________ plan

liquidity management

People without enough ________ often use _________ to cover immediate shortfalls, but this approach can be very costly

liquidity; credit

what is the best way to evaluate your options for accomplishing your financial goals

listing and comparing the pros and cons of each option

to determine the market value of your car, you would be most likely to use what as a guideline

listings on the Kelley Blue Book web site

financial goals that will take more than five years to accomplish should be categorized as _______ goals

long term

risk is defined as the likelihood of _______

loss

when creating a plan for ________, you would likely ask yourself what expenses you anticipated and what regular debt payments you need to make

managing your income

Payment schedules for most long term loans involve _______ payments

monthly

what is the best example of a variable ecpense

monthly grocery costs

Most ________ typically require a minimum investment ranging between $500 and $3,000

mutual funds

if your are unsure about investment selections and want the expertise of a professional portfolio manager, you should invest in ________

mutual funds

what are commonly used as investments for section 529 college savings plans

mutual funds

what types of investment offers an investor the most protection from a severe drop in the value of an investment

mutual funds

the purpose of a budget Is to play in your spending in savings considering your income level so you can meet your

needs and wants

you can use the information from your ___________ to calculate your debt-to- asset ratio

personal balance sheet

A(n) ___________ involves specifying financial goals and describing in detail the spending, financing, and investing plans needed to reach those goals

personal financial plan

the initial amount you owe in a liability such as a home mortgage is referred to as the ________

principal

when you consider how much and what type of insurance you need, you are deciding how to _______

protect your assets and income

The defining characteristic of a liquid asset is it

quick availability

homes, rental property, farms, and timberland are all examples of ________

real estate investments

when you calculate your net worth and file taxes, good ________ is particularly important

record keeping

Michelle wants to minimize any possibility of loss and be certain that following her financial plan will lead to the achievement of her short term and long term goals. Michelle has a low tolerance for ________

risk

without insurance on a major purchase, the owner assumes all of the ______

risk

the primary cash inflow for most adults is their ________

salary

what is the best example of an intermediate term-goal

saving enough to buy a used car and pay for monthly insurance

what is the best example of a long term goal

saving enough to fully pay for children's college education

a good budget will force you to _________ to take advantage of unexpected opportunities

set aside money

financial goals that you plan to accomplish within the next year should be categorized as _______

short-term

Market value refers to what something would be worth if you ________

sold it today

as your financial goals become more involved, you will need a more ________ financial plan

specific

people purchase ________ in a company in hopes that the company will do well ab their investment will increase in value

stocks

Payment terms for a loan for a major purchase of the least likely contain what?

the monthly income

to determine your net worth, subtract _________ from _________

the total of your current and long term liabilities; the value of your total assets

what statement about accomplishing financial goals is true

there are often multiple ways for an individual to achieve his or her financial goals

What best explains why two people who are an identical financial situation may choose to different financial plans to meet their respective financial goals

they have different levels of tolerance for risk

why do people invest money

to make more money

A(n) _________ expense is an expense that changes from one time period to the next

variable

figuring your net worth is an easy way to measure your _________

wealth

The first step in creating a budget is

Determining net worth