Personal Financial Literacy: T1

A long-term goal is a desired result that may be achieved in less than one year.

FALSE

Relevant information is information you can't trust.

FALSE

_____ is a process for making financial decisions.

PACED

It is important to evaluate your progress toward your goal.

TRUE

A misconception is a _____.

misunderstanding

Zachary, a college student, watches a financial show on television. The host is a well-known financial adviser. He is talking about borrowing from a 401 (k). This information is _____.

reliable, but irrelevant

Choose all that apply. Financially responsible people _____.

save their money have a budget set goals spend less than they make pay bills on time

The second step in setting goals is _____.

thinking seriously about your goals

List three or four effects of financial irresponsibility.

*Typed out answer* - not having enough money to pay your bills - losing money - effecting someone else's life in a negative way - bad credit

Carrie has the following assets and liabilities. What is her net worth? Assets car - $3,500 savings - $1,000 cash - $80 earnings - $120 Liabilities car loan - $3,000 credit card - $500

$1,200

Andrew wants to ask his brother to help him invest money in the stock market. He scanned the paper and picked a company he had heard about. What should Andrew do?

He should read a good book about investing in stocks.

Assets are items you own that have value.

TRUE

It's important to use information that is both reliable and relevant when making financial decisions.

TRUE

When making financial decisions, it's important that you evaluate the source critically.

TRUE

Choose all that apply. Relevant information is _____.

appropriate for your age suitable for your situation

The first step in setting goals is _____.

calculating your net worth

An example of financial irresponsibility is _____.

driving without car insurance

Adam's goal is to have $4,000 saved by the end of the year. However, he spent too much at the mall this week and will not be able to put $150 in his savings account. This is an example of _____.

how his decision affected his goal.

Choose all that apply. Reliable financial information includes _____.

information from experts in the field information from recognized and reputable organizations information that can be verified by other sources

Lori would like to find the cheapest car insurance. She conducts an Internet search. She clicks on one of the results, and it is a form used to generate a quote for car insurance. This information is _____.

relevant

You receive a retirement brochure in the mail from a reputable financial adviser. This information is _____.

reliable

Read the following sources and decide which have characteristics of reliable and unreliable information. a brochure from your bank about different types of checking accounts: a friend's advice: the local news: a Web site that was last updated in 1990: an advertisement on television: http://smartaboutmoney.org/: http://personalfinance.nau.edu/:

reliable unreliable reliable unreliable unreliable reliable reliable

Read the following actions and decide if they are responsible or irresponsible. checking my credit score: paying a credit card bill one day late: listing expenses in a budget: making decisions without all of the information: purchasing something because it is on sale: writing some goals: researching what a mutual fund is: making financial decisions without discussing it with your spouse: finding a savings account with a great interest rate: looking for the cheapest price for an item:

responsible irresponsible responsible irresponsible irresponsible responsible responsible irresponsible responsible responsible

Select each of the reasons for becoming financially literate.

saves money reduces stress helps you make smart decisions reduces your risk of losing money helps you reach your goals helps you become a good steward of God's resources

Shannon wants to find out about paying taxes this year. She visits www.mikestaxadvice.com. This information is _____.

unreliable

In three to four sentences, describe how you can act in a financially responsible manner.

*Typed out answer* There are many ways to be financially responsible. Saving money, finding the best price for something you need, and being truthful about you money are three out of many ways to act in a financially responsible way. When you have knowledge on financial literacy and are being responsible with your money if will save you money and the stress of not having enough money to do things needed.

Nicole is very interested in photography. She wants to purchase a new camera. It costs $900. She gets paid $400 every two weeks. Write a goal for her.

*typed out answer* Nicole will save $250 every 2 weeks for a total of 6 weeks. On week 7 she will only save $200, which leaves her with $50 extra dollars to spend.

Select the items from this list that are examples of misconceptions.

A high school student is too young to have a budget. A bank is not a safe place to keep your money. After high school, there is no need to become more educated.

Choose all that apply. Select the examples that demonstrate financial honesty.

Cooper includes all truthful information when he completes an application for a checking account. Greg discloses all the fees in the sales contracts for the products he sells in his store. Brianna writes a check knowing that she has the funds in her checking account to cover it.

Sam's laptop is four years old and needs a new hard drive. He got a quote that it will cost $450 to fix it. A new, similar laptop with a faster processor costs $750. Use the PACED decision process to decide what his best choice is. Show each step.

Define the Problem: Sam's laptop is four years old and needs a new hard drive. List the alternatives: 1. It will cost $450 to fix his computer. 2. It will cost $750 to get a laptop with a faster processor. Select the criteria: 1. It will cost $450 to get his four-year old laptop fixed. 2. It will cost $750 to get a brand new laptop that is faster than his old one. Decide: Sam needs to buy the new laptop for $750 because it is new and faster, therefore will give him the least amount of problems.

Read the following descriptions. Decide who demonstrates good habits.

Erica has a file folder with old bills and receipts. She also creates a folder on her desktop for all of her financial information.

John looks at his budget and notices that because of additional expenses this month, he will be unable to pay all of his bills. He is thinking about getting a cash advance, but isn't sure. What should John do?

Find reliable and relevant information, use the Bible for guidance, and possibly visit a representative from the bank to find out about special fees.

Which of the following goals is most effective?

I will purchase a three-bedroom house located near Cherry Park by my twenty-fifth birthday. To reach this goal, I will graduate from college and secure a job as a software developer.

Ethan would like to take a trip to England to visit his grandpa. Which of the following is a good goal for him?

I will work one extra shift per week, and I will set aside $150 per paycheck to purchase a plane ticket to England.

Read the following two descriptions. Decide who has better financial habits and attitudes.

Jason reads online postings at work for other jobs. He reads about the training and experience required and decides to take a few classes at work.

Choose all that apply. Select all of the steps for calculating net worth.

List your assets. Total your assets. Total your liabilities. List your liabilities. Subtract your liabilities from your assets.

Choose all that apply. Carla has been working at her job for about six months. It will soon be time to complete her first tax return. What should Carla do?

Obtain the tax brochure from the IRS and read it. Ask her parents about how to fill out tax forms. Set aside some time to complete the forms well before the deadline.

Financial literacy is knowledge about money and what you do with money.

TRUE

Written goals should be detailed, measurable, and include a plan.

TRUE

In one to three sentences, describe reliable financial information.

Reliable financial information is a trustworthy source that will help you with things dealing with your money.

Tina wants to start saving for college. She heard about CDs and mutual funds, but doesn't know which is best for her. What should Tina do?

She should become more knowledgeable by talking with a financial adviser or by taking a class.

List the steps in the PACED decision-making process.

Step 1: Define the Problem Step 2: List the alternatives Step 3: Select the criteria Step 4: Evaluate the alternatives Step 5: Make a Decision

A good steward of God's resources is careful and responsible with money.

TRUE

Financial literacy includes information about income, banking, loans, and credit cards.

TRUE