Chapter 1
Which of following is NOT a part of personal financial planning
Time management
A rainy day fund is designed to help you deal with financial emergencies
True
Calculating the opportunity cost of a purchase helps you consider the cost of not doing something else with your money
True
Every time you decide to purchase something, you incur an opportunity cost
True
Financial planning can affect the age at which you retire
True
Part of financial planning is thinking about and planning for unexpected expenses
True
Teenagers who start investing now and continue to save responsibly can reasonably hope to save one million dollars or more by the time they retire.
True
The internet can be a valuable source of information to use in personal financial planning
True
When deciding whether buying a certain car fits into your personal financial plans, you should consider how much you drive and how fuel efficient the car is
True
When someone uses credit irresponsibly, it will likely be more difficult for him or her to buy anything on credit for a long period of time
True
Which of the following is a long- term financial goal?
buying a house
Planning your spending, borrowing, and saving are all aspects of ________.
personal financial planning
When is the best time to start saving for long- term financial goals?
when you are young and have fewer financial obligations
Which of the following supports the argument that many Americans pay too little attention to their personal finances?
About half of Americans working full- time report having to live paycheck to paycheck
Because of the dangers posed by the Internet you should ______ for financial planning
Cautiously use it
The ________ you begin saving to finance a long-term goal, the ________ money you have to set aside on a regular basis
Earlier; more
Which of the following is NOT a financial goal?
Enjoying your career
Despite the increased earning potential that a person gains through a college education, a college education rarely pays for itself.
False
Financial information found on the internet is always reliable
False
Good financial planning involves focusing on short-term goals first and then addressing immediate-and long- term goals
False
If your financial advisor has strong references from current clients, you should not be concerned about whether she has a certification such as CFP or CPA
False
In comparison to other long- term financial goals, having and raising a child is relatively inexpensive
False
It is impossible to plan for an unexpected loss in wages
False
Only a small percentage of Americans working full- time live paycheck to paycheck
False
Teenagers should be more concerned with short- term financial goals than long- term financial goals
False
The average level of savings per person in the United States has been increasing steadily in recent years
False
Which of the following is NOT a financial issue for which you should plan?
Lower interest rates for savings accounts
Which of the following is an example of a liquid asset?
Money in your checking and savings account
Raising a child, including sending him or her to college, can be expected to cost ________ over the child's life from birth to age 22
More than $250,000
________ of people will have an emergency need for money at some point in their lives
More than 50%
Understanding the opportunity costs of all your purchases is most likely to help you think about and change you ________
Spending habits
What does the opportunity cost of a purchase tell you?
The cost of the purchase plus the cost of not doing or purchasing something else
In general, the more education you have, the ________ your ________.
Higher; salary
Tyra has to decide whether to work an extra shift at her job at the movie theater or take the evening off and go to a concert with her friends. To make her decision, Tyra adds up what she could make by working the extra shift and what she will spend at the concert. Tyra is calculating her ________
Opportunity cost
The purpose of insurance is to _______ your assets
Protect
A financial advisor will likely have a better understanding of ________ than you do
Retirement planning and tax laws
The best time to start investing money to research your financial goals is ________
Right now
Which of the following is NOT a reason that the type of education you choose to pursue is a financial decision?
You will be more likely to enjoy a job that holds your interest
