Ecom & Personal Finance Common Assessment

How does an individual's credit history affect the ability to purchase a home?

A higher credit score makes it easier to obtain a mortgage and results in lower interest rates.

For which of these purchases would a loan NOT be a sensible option?

Airline tickets to your dream vacation

Which payment option takes money out of your bank account immediately?

Debit Card

As you approach retirement, there are many things to think about. Experts advise that you will need about 80 percent of your pre-retirement income to continue your current quality of life. The exact amount depends on your individual needs. Some important factors to consider include:At what age do you plan to retire? . . .Where do you plan to live when you retire? Will you downsize, rent, or own your home?"Saving and Investing," USA.gov Based on the text, how does personal budget planning affect a person's ability to enjoy retirement with a comfortable income?

Devising a budget plan that is inclusive of long-term goals helps a person save enough money for retirement.

Form 1040 and Form 1040EZ are:

Forms for filing income tax returns.

What is the difference between gross and net pay?

Gross pay is before taxes are subtracted but net pay is after taxes are taken out.

When preparing your taxes, what can possibly help reduce the amount of taxes that you owe?

Having credits and deductions

Saving is a key principle. People who make a habit of saving regularly, even saving small amounts, are well on their way to success. It's important to open a bank or credit union account so it will be simple and easy for you to save regularly. Then, use your savings to plan for life events and to be ready for unplanned or emergency needs. Actions You Can Take Start saving, form a savings habit, and pay yourself first! Save for retirement, children's education, and other major items "Save and Invest," Financial Literacy and Education Commission Based on the text, how does a fiscally responsible individual use a savings account to protect his or her financial security?

He or she uses it to store and monitor his or her money

Which is an advantage of buying a home versus renting an apartment?

Home ownership has long-term benefits including owning an asset.

The W-4 tax form is used to ___________.

Indicate how much federal income tax to withhold

Most credit cards charge high interest rates—as much as 18% or more. . . . If you owe money on your credit cards, the wisest thing you can do is pay off the balance in full as quickly as possible. Virtually no investment will give you returns to match an 18% interest rate on your credit card. That's why you're better off eliminating all credit card debt before investing. Once you've paid off your credit cards, you can budget your money and begin to save and invest. "Pay Off Credit Cards or Other High Interest Debt,"U.S. Securities and Exchange Commission Based on the text, how does credit card interest affect one's financial goals?

It drains funds that could be invested

Jerry and Darren both applied for a loan to purchase a car. Jerry had never been in debt before as he always makes his purchases in cash. Darren, on the other hand, used debt quite frequently to take advantage of promotions such as 0% financing. Darren handled his debt responsibly and always made his payments by the due date. The lending institution denied Jerry's loan application and offered Darren a loan.

It enables an individual to establish a credit history.

An easy way to save is to pay yourself first. That means each pay period, before you are tempted tospend money, commit to putting some in a savings account. . . . People who keep track of their savingsoften end up saving more, because they have it on their minds."Save and Invest," Financial Literacy and Education Commission Based on the text above, what is an advantage of putting money from a paycheck directly into a savings account?

It establishes a habit of setting money aside before being tempted to spend it frivolously

What is true of the form shown above?

It is completed by your employer, and sent to you

What role does insurance play in financial planning?

It provides protection of income and assets

Should I pay my whole bill every month? You can pay your whole bill every month. That means you probably will not pay interest. That makes credit less expensive for you.You might not pay your whole bill every month. You might pay only the minimum payment. That means you will pay interest on the amount you did not pay back. That amount is called the balance. Credit is more expensive if you pay the minimum amount due. If you do not pay the minimum amount due, also called the minimum payment: your interest rate might go up you might have to pay fees your credit will cost you a lot of money "Using Credit," Federal Trade Commission How will paying less than the minimum payment on a credit card each month affect one's creditworthiness?

It will make it harder to obtain credit with low interest rates..

Which of these is most beneficial for maintaining a good credit score?

Manage your debt wisely

The amount of money you're paid, after all taxes and deductions are taken out of your paycheck is called________.

Net income

The rate of ________ is determined by assessing the value of land and buildings.

Property tax

These taxes come out of a person's paycheck and are meant to help support people once they retire.

Social Security Tax

How does the government pay for roads, schools, and emergency services?

They are funded through taxes

What is the best reason for why someone would want to lease a house instead of buy one?

They are planning on living there for a short period of time.

Why is it necessary to have a W-2 or 1099 form when preparing your tax return?

They report income which needs to be used to file taxes

Which of the following is TRUE regarding unexpected expenses?

They should be planned for.

Which is TRUE when you make only the minimum payment each month?

You are charged interest on the remaining balance

Insurance that covers damage to your car from an accident is called...

collision insurance

When paying bills and organizing a budget, which item and category should be considered first?

mortgage or rent, fixed

An insurance premium is paid by...

the policyholder

How does a fiscally responsible individual use an emergency savings fund to improve his or herfinancial well-being?

to provide for unforeseen expenses

Leasing a car may be a better option than buying a car if...

you don't plan on having it for long and don't want to worry about regular maintenance.