Final Exam Review - Personal Finance
Something people buy to protect themselves from losing a lot of money in the event something happens to them or their property is known as...
insurance.
What type of federal funding is free money, but is based on financial need only?
Federal grants
Which of the following is NOT considered part of your benefits package available from your employer?
Free technology equipment
Which of the following should NOT be considered when setting a current budget?
Future income
Andrew doesn't want to spend a lot of money on student loans, and does not qualify for grants. What is his best option for affording a Bachelor's Degree?
He can attend the local community college whose courses transfer to the public four-year college.
Which of the following is a benefit of using a budget?
Helps to keep track of the money you receive, prioritize your spending, and reach short- and long-term financial goals
What are the benefits of attending a local community college?
It is cheaper to earn an Associate's degree at a community college and then transfer to a four-year college to finish, you can live at home and save dorm fees while earning an Associate's degree, and choosing a local community college within closer driving range saves on transportation costs.
Which fact supports the idea that renting is a good option for living in a place for a short period of time?
Landlords take care of most maintenance.
Investing is best for...
Long-term financial goals, like paying for retirement.
Which example shows an advantage of owning a car over leasing one?
No restrictions on the number of miles to drive and the ability to customize, or make changes to the car.
Which savings account will earn you the most money?
One that earns simple interest daily.
Which savings account will earn you the least money?
One that earns simple interest monthly.
Which is a positive reason for using a credit card to finance purchases?
Paying it off on time can help you build your credit history.
In addition to needs, what should you plan for first when creating a budget?
Recurring expenses
How can you ensure you don't go over your budget?
Round up your expense estimates to add a buffer
Which of the following statements about savings accounts is FALSE?
Savings accounts don't usually require a minimum balance.
Which is one of the best ways to get reliable information about a product?
Search online reviews
Which of the following is a way to track your spending?
Spreadsheet budget, envelope method, and an app
TRUE OR FALSE: A savings account that COMPOUNDS interest daily will earn a higher return than a savings account that pays SIMPLE interest daily.
TRUE
TRUE OR FALSE: Generally, the more education you receive, the higher your lifetime earnings will be.
TRUE
What is net pay?
The amount of money you're paid after all taxes and deductions are taken out of your paycheck.
How is a post from a social media influencer different than a comment from a regular consumer?
The influencer is paid to post the product.
Making the choice to spend money on post secondary education pays off in the long run because:
The salary you will earn with a degree will pay back the cost of college over your career.
What can insurance protect you from?
Theft and Financial Loss
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.
Which of the following statements about check cashing companies is TRUE?
They charge high fees.
Your employer sends you a _____ form that tells you how much you've made and how much you've paid in taxes in the last year.
W-2
When are loans a good option to use?
When paying for higher education
When is it ok not to have health insurance?
You should always have health insurance.
When making a large purchase, you should avoid everything EXCEPT...
a price that fits comfortably in your budget.
When you are deciding what to buy, you should not...
assume that buying the cheapest item is the smartest choice.
When looking for pre-approval on a car loan you should NOT...
get a loan from the car dealer directly to keep things simple.
The _____ is a flexible market that allows you to work short-term, independent jobs.
gig economy
Everyone interested in post secondary education should complete the FAFSA because...
it allows you to be eligible for federal student aid and other scholarships and grants.
Living at home could save you money while enrolled in post secondary school or training because...
it reduces costs of room and board.
Paying only the minimum balance on your credit card can lead to...
paying more interest
Recommended methods to protect yourself from identity theft and fraud include...
placing a credit freeze with the credit bureaus.
Wearing a seat belt, not texting when driving, and driving carefully are all examples of...
risk management strategies.
Buying a home security system is an example of protecting your home against...
risk.
An insurance premium is paid by...
the policyholder.
Charitable donations, entertainment expenses, and financial goals are all examples of...
things to consider when creating a budget.
Living on campus while earning your degree can help you save money on...
transportation.
The price of a single item within a group of items is known as the _____ of the item.
unit price
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.
Which is a tax-free savings account that can only be used for educational expenses?
A 529 plan
A mutual fund is...
A type of investment that invests in a mix of different types of investments.
Which is NOT considered an additional cost beyond tuition for higher education?
Academic counseling
Which of the following financial institutions typically have the highest fees?
Check cashing and payday loan companies
Which type of bank account is best for everyday transactions?
Checking account
Which type of bank account typically offers the least (if any) interest?
Checking account
Insurance that will pay for injury to another driver and/or damage to their car if you are in an accident is called...
liability insurance.
Which of the following answers lists 4 year colleges from generally the least expensive to most expensive?
In-state public university, out-of-state public university, private university
What should you do before you withdraw money from the ATM?
Inspect the ATM to make sure it wasn't tampered with.
Which of the following statements about investing is TRUE?
Investing is riskier than putting money in a savings account.
When filing an insurance claim, the policyholder must pay a _____, which is the amount you owe before insurance will cover the rest of the bill.
deductible
An unanticipated expense that will make it difficult to get by day-to-day would be a candidate for...
emergency fund spending.
To maintain a good credit score you must...
manage your debt wisely.
A stock is....
A share of ownership in a company.
What should you NOT use a loan to purchase?
Airline tickets to your dream vacation
Which item is important to consider when selecting a credit card?
Both APR and fees
TRUE OR FALSE: When considering a job offer, you should only consider how much you're being paid before you accept the offer.
FALSE
Which of the following is a possible tax or deduction that may show up on your paycheck?
Federal income tax, Contributions to retirement savings, and FICA.
Which of the following is NOT a common feature of a financial institution?
Investment Trading
Which of the following expenses would be a good reason to spend money from an emergency fund?
Repair your laptop that you use for homework.
Which of the following statements is true about taxes?
Taxes pay for schools and government departments, taxes pay for roads and emergency services, and taxes are often used at the federal, state, and local levels.
What do you need in order to fill out your 1040?
Your W-2, your routing and bank account number, and a record of any other supplemental income
Which choice or choices best describes the purpose of an emergency fund?
An emergency fund prepares you for unexpected expenses, keeps you from borrowing money from friends and family, and removes the worry about expenses not in the budget.
For most careers, which degree will most likely result in the highest lifetime earnings?
Bachelor's degree
What are good places to look to find your current expenses when building your budget.
Bank and credit statements
Which housing option gives you more freedom and more responsibility?
Buying a house.
Which payment option is not accepted online?
Cash
Which forms of payment are linked to a bank account which limits the amount of money you can spend to the balance in your account?
Checks & debit cards
How would you reconcile your bank account to avoid spending more than you have?
Compare your own records of your spending with your financial institution's records.
Which method of payment actually is a form of borrowing money that needs to be paid back later?
Credit Card
Which payment option can offer additional security like fraud protection?
Credit Card
Which payment option could have interest charged to you?
Credit Card
Which payment option takes money out of your bank immediately?
Debit Card
Maria is a high school senior. She wants to go to the local community college and become a nurse. Her grades are average, but she comes from a low-income family. What could she do in order to afford the next step in her dream to become a nurse?
Maria could apply for federal grants to help pay for college, and she can apply for need-based scholarships.
Which of the following is true about the Free Application for Federal Student Aid (FAFSA)?
The earliest you can submit your FAFSA is October 1st of each year, the form is available online or on paper, and states may have different deadlines for applying for state aid.
Which of the following statements about check cashing companies is FALSE?
They charge low fees.
Which of the following is TRUE regarding unexpected expenses?
They should be planned for.
Secured loans are less costly than unsecured loans because...
They usually have a lower interest rate, require collateral, and are less risky for the financial institution.
Why is it important to reconcile your bank statements?
To avoid spending more than what is in your account, to detect any errors in your account, to determine if you were charged any fees.
What is the purpose of the W-4 form?
To inform your employer of how much federal income tax to withhold from your paychecks.
What option will NOT be available if you are behind on loan payments?
You can ask to get out of your plan.
What is a consequence of not having health insurance?
You must pay all costs for health care and medical emergencies.
What is NOT a benefit of having a good credit score?
You'll get accepted to better education institutions.
If there is a mistake with one of your bank accounts, who should you contact to resolve the issue?
Your financial institution
If you get into a car accident, your _____ may increase because you will be considered riskier for insurance companies to cover.
insurance premium
What are possible red flags or signs of a scam when buying a car?
Being told your financing fell through and charging of excessive fees.
How is an advertisement different from a comment from a regular consumer?
The advertisement is likely one-sided.
Insurance that covers damage to your car from an accident is called...
collision insurance.