FCS 340 Exam 1

Ways to save money when eating out

1. Bring your own lunch to work 2. Share a meal with your date 3. Get water, not soda 4. Eat a late lunch not dinner 5. Use coupons

Steps to a setting a Family Financial Plan

1. Decide what you are about 2. Evaluate your financial health 3. Define your family goals 4. Develop a plan of action 5. Implement your plan 6. Revise your plan as necassary

net worth statement

A formal report that shows what an individual owns, what an individual owes, and the difference between the two.

What is the HALT principle?

Avoid buying things when you are hungry, angry, lonely, and tired.

Which of the following are Principles of Provident Living? Select all that apply.

Being content with what you have Avoiding excessive debt Preparing for rainy-day emergencies

Which of the following financial elements are part of developing a plan of action? Select all that apply.

Budget Planning for big-ticket purchases Plan for managing debt Plan for insurance Investment plan Plan for retirement

What does the author believe is the biggest financial mistake made by recent graduates?

Buying a house beyond their means.

The authors suggested four answers to the question, "Why should I learn about family finance?" Which is not one of the four reasons?

Community: Becoming a stronger citizen and member of your community.

fixed expenses

Costs that do not change from month to month

The second important question the authors suggested you ponder: "What are the profound principles upon which the stewardship perspective is based?" Which is not one of the four stewardship principles?

Discipleship

Define DNAH-ial

Do nothing and hope budgeting. THE PLAGUE

For those who find living within a budget difficult, which of the following is the most straightforward method?

Envelope method

All family financial records should be kept forever.

False

What is not an example of a fixed expense?

Food

What would not be categorized as a variable expense?

Insurance payment

Attributes of the best budgeting method include which of the following? Select all that apply.

Low cost Allow downloading of bills from banks and credit card companies Minimize the time spent on finances Relatively easy to use

Which of the following is not identified as a purpose of the book?

Teach you to accumulate wealth.

What is a miscellaneous section?

The part of your budget where unforeseen expenses go. VERY IMPORTANT

How does inflation happen?

The supply of money vs. the supply of good and services

Define Payment

a periodic amount invested or received during the life of the investment.

Define Family Net Worth statement

a value calculated by subtracting your family's liabilities by your family's assets.

What is interest?

any use of your money that results in a return on investment.

Ways to save money on transportation

1. Do not buy a new car 2. Pay cash for vehicles 3. Look at total cost of ownership 4. Get an inexpensive car for male teenage drivers 5. Service your car on time 6. Shop for auto insurance. 7. Bundle trips 8. Walk and bike

Saving money on household expenses

1. Get rid of cable 2. Cut your family's hair 3. Lower thermostat in winter and raise in summer 4. Choose wise cell phone plans 5. Turn off electronics 6. Shop at garage sales in nice neighborhoods 7. Look online. 8. Shop at thrift stores 9. Set a waiting period before making big purchases

Two ways of living within your means

1. Increasing income 2. Decreasing expenses.

Saving money on recreation

1. Leverage timeshare presentations 2. Use reward miles from credit cards 3. Be flexible to travel at the last minute 4. Stay with family members 5. Vacation at home 6. Go to dollar theaters 7. Make good use of the library.

Ways to save money on food

1. Prepare meals from raw ingredients 2. Remember HALT 3. Make a menu and shop for just those items 4. Use loss leaders and ad match 5. Buy store brands 6. Reduce # of trips to the store 7. Pay cash 8. Buy in bulk

Steps for developing a budget

1. Set Goals and decide what you need to do to reach them 2. Categorize your current income and spending 3. Divide up your income into categories 4. Implement the budget and track spending 5. Compare spending to your budget and make changes if needed.

Name different budgeting methods

1. Using online services 2. Using spreadsheets 3. Using computer software 4. Envelope method 5. Zero based budgeting

The text suggests creating a budget that includes at least a percent allocation to long-term savings.

10

A study conducted by MIT revealed that shoppers using a credit card spend more than those using cash. How much more?

100%

What is MAD money

A certain amount of money allocated to each spouse each month that they can spend however they want, without accounting to the other spouse

In the reading, the story of Elder Robert D. Hales and his new bride was shared. He was in the air force and they'd missed Christmas together. What did he want to buy his wife?

A dress

Which of the following statements about compound interest were made in the reading? Select all that apply.

A marvelous work and a wonder Eighth wonder of the world Interest earning interest

What is an income and expense statement?

A record of your family's past cash inflows and outflows over a specified period of time

What to do with inflation?

AVOID IT LIKE THE PLAGUE

Of the four stewardship principles, if followed wisely, which is our gift back to God?

Accountability

Which of the following strategies were outlined to lower food costs? Select all that apply.

H.A.L.T. Use a shopping list Buy store brands Pay cash Buy in bulk Take advantage of loss leaders

Which principle can help with us not buying things we don't need or haven't budgeted for?

HALT

What budget category do the authors suggest commonly gets overlooked?

Miscellaneous

What should setting goals involve?

Process of understanding yourself and your family. Trying to understand what God wants you to accomplish.

What wasn't identified as a method to save money on transportation costs?

Shopping around for the lowest rate auto loan possible.

What does the "S" in SMART goals refer to?

Specific

What is a SMART goal?

Specific, Measurable, Attainable, Realistic, Timely

The authors recommend the investing mantra "get rich slowly." They recommend avoiding which of the following strategies?

Speculation

Which of the following principles should guide effective family budgets? Select all that apply.

Spend less than you earn. Keep good records. Use a budgeting method that meets individual and family needs.

What does TVM stand for

Time Value Money

"Mad money" should be a budget category even though you aren't responsible for how it is spent.

True

Eating out at restaurants is an American craze—as a country, we spend more money at restaurants than we do at grocery stores.

True

One of the most often neglected budget categories is miscellaneous (the category for unexpected expenses).

True

When discussing tips for frugal living, the author suggests decreasing one's living expenses because it's easier to control the spending side than it is the income side of the budget equation.

True

While the focus of this lesson is on tips for frugal living, the author cautions us not to miss out on meaningful experiences due to unnecessary frugality.

True

Which textbook recommendation in the area of saving money on recreation would Dave Ramsey be at greatest odds with?

Using credit card reward miles to pay for flights.

Current Market Value

What someone would pay right now for an asset.

Define Investment

current commitment of your money with the expectation of financial returns

variable expenses

expenses that change from month to month

Cash outflows

expenses, or items for which you must spend money

Define cash inflow

income available to be used for family expenses

Lump sum

one-time payment or investment

Purchasing power

the ability to purchase goods and services

Annuity

the disbursement of money on a period basis

Compounding periods

the frequency with which interest is applied to your investment

Define Inflation

the increase in price you pay for service over time

Define Future Value

the monetary value of an investment at some point the future after taking into account the present value, the interest rate, the # of compounding periods, and any payments.

Define Present Value

the original value of money borrowed or invested

Opportunity cost

the potential loss or gain that happens when one financial option is chosen over another

Define Interest Rate

the rate you will receive for investing at a specified compounding period for a specified period of time.

Nominal Return

the return on an investment before the impacts of inflation and taxes are taken into account

After-tax return

the return on your investment after taxes

Most financial planners recommend worth of living expenses set aside in a savings or checking account as an emergency fund.

three to six months

Define Compound Interest

when you interest is earning interest

Real return

your return after taxes and inflation