Personal Finance
What is the first thing you should do with your money?
"Give"
Banks charged __________ in fees to the American public.
$10.3 billion
The average student loan debt is about
$30,000
Using the sinking fund approach, how much do you have to save each month to buy a $4,800 car one year from now?
$400
At your age, a fully funded emergency fund should be:
$500
Americans today charge over __________ a year on their credit cards.
1 trillion
Your first checking account should be opened between:
13-15
Buying things on credit was extremely rare before which year?
1917
Percentage of Americans living paycheck to paycheck:
70%
Personal finance is ____% behavior and ____% knowledge.
80, 20
Which of the following statements is false?
A budget is meant to summarize the saving and spending that has taken place over the past year.
Money is ____________; it is moving all the time.
Active
A written budget, if followed, removes _________ from your finances.
All of the above
For which of the following should you save?
All of the above
Which of the following are reason(s) to save?
All of the above
Which of the following is a consequence of overdrawing your checking account?
All of the above
Which of the following is a consequence of spending more than you make?
All of the above
Which of the following is a reason that people donʹt save money?
All of the above
Why was the use of credit uncommon prior to 1917?
All of the above
Your monthly budget should include:
All of the above
Key components of financial planning include all of the following except:
Allow your financial planner to make all of your major money decisions
Money is _______.
Amoral
What is the first key component of a successful financial plan?
Assess your financial situation
When it comes to personal finance, the math is easy. Whatʹs challenging is managing your ___________.
Behavior
You need to learn how to manage your money __________.
Behavior
In America, being "normal" is ______.
Broke
A written cash flow plan.
Budget
The following are guidelines for budgeting with an irregular income except:
Budgeting with an irregular income is no different than budgeting with a regular income.
A summary of all the income and outgo over a certain time period.
Cash flow statement
Your own record of all your transactions.
Check register
Interest paid on interest previously earned.
Compound interest
A person or organization that uses a product or service
Consumer
During the Great Depression, New Deal policymakers came up with mortgage (home loans) and consumer lending policies that convinced commercial banks that:
Consumer credit could be profitable
Saving money is about emotion and ___________.
Contentment
Saving is about:
Contentment and emotion
The granting of a loan and the creation of debt; any form of deferred payment
Credit
Who profits from interest on credit card debt?
Credit card companies
Which of the following statements best describes how Americans are being outsmarted by banks and other lenders?
Credit is marketed so well that we desire to have it while completely dismissing the fact that interest rates and fees continue to destroy our financial well-being.
Which of the following is not a record-keeping feature you could expect from your bank?
Customer service reconciles your account for you
An obligation of repayment owed by one party to a second party
Debt
To save you need to be focused and practice ________.
Discipline
Non-essential expenses.
Discretionary
Eating out is a:
Discretionary expense
A budget won't work if you ______________.
Don't do it
A system by which goods and services are produced and distributed
Economy
The First Foundation tells you to save $500 for _______.
Emergencies
Money set aside and left alone for a ʺrainy day.ʺ
Emergency fund
Series of envelopes that are divided into categories and are used to store cash for planned monthly expenses.
Envelope system
The budget is your written plan and tells ______ _____ where to go.
Every dollar
The zero-based budget is making sure that ______ dollar has a ______ , ______ , on purpose, ______ the month begins.
Every; name; on paper; before
"90 days same as cash" deals are a great bargain.
False
A budget is wondering where your money went instead of telling it what to do.
False
A car breaking down is an unexpected expense, so you can't budget for it.
False
A debit card cannot be used for online purchases.
False
All checking accounts are free.
False
Americans typically maintain a very high savings rate.
False
Being "money smart" is very difficult and takes a lot of time to learn.
False
Ben and Arthur teach us that you have to start investing by age thirty.
False
Both Ben and Arthur made the same amount of money investing, regardless of when they started.
False
Compound interest is when your interest rate doubles.
False
Credit cards and car loans are a great idea for most people.
False
Credit cards are safe to use in case of an emergency.
False
Debt is only when you owe money on credit cards.
False
Everyone should have the same financial plan. A budget that works for one person should be sufficient for everyone.
False
Expensive houses and new cars are a true indication of wealth.
False
Having more than one bank account is never a good idea since it can complicate money management.
False
If you write a zero-based budget every month, it is not necessary to reconcile your account.
False
It's the bank's fault when you overdraft your account because they should know how much you have in your account.
False
Learning the language of money is not that important because you will be able to depend on financial planners to manage your money.
False
Most Americans avoid the use of credit when it comes to buying big-ticket items like a car or furniture for their home.
False
Most Americans today are wealthy and will have financial security when they retire.
False
Most millionaires inherited their money from their parents.
False
Once you write your budget, it's impossible to change it.
False
Only a few people in America can become millionaires.
False
Only a few people in America have the ability to become a millionaire.
False
Only accountants and financial experts can win with money.
False
Sacrificing to win is abuse.
False
Since you are a teenager, what you do now with money will have little effect on your financial future.
False
The debt system helps people gain wealth.
False
The envelope system is really difficult to manage.
False
The first thing you should save for is your retirement fund.
False
The only millionaires are those you see on professional sports teams, in the movies, etc.
False
Things are always as they seem.
False
When it comes to saving money, the amount you save is determined by how much you have left at the end of the month once all of your spending is done.
False
You can't pay cash for a car.
False
You should always use a credit card for purchases.
False
You should keep your emergency fund in the same account as your spending money.
False
You should put your $500 emergency fund in your everyday checking account.
False
You should save first, give second, and spend third.
False
Your income level greatly affects your saving habits.
False
The knowledge and skillset necessary to be an informed consumer and manage finances effectively
Financial literacy
The five steps to financial success
Five Foundations
Expenses that remain the same from month to month.
Fixed
Rent is a:
Fixed expense
Which of the following is not one of the three basic reasons for saving money?
Have money available to lend to friends
Which of the following statements best explains why income alone does not determine wealth?
How much money a person makes does not dictate his or her spending and saving behavior.
An item that is bought without previous planning or consideration of the long-term effects.
Impulse Purchase
The persistent rise in the cost of goods and services
Inflation
A fee paid by a borrower to the lender for the use of borrowed money.
Interest
Percentage paid to a lender for the use of borrowed money, or the percentage earned on invested principal.
Interest rate
Car repairs are a:
Intermittent expense
Which of the following is not a benefit of understanding your own money personality?
Knowing your money personality allows you to excuse excessive spending because it is simply part of your nature.
To manage money successfully, you must understand the _________ of money.
Language
Which of the following is not a factor in becoming money smart?
Learn how to read your credit card statements
Which of the following best explains why students should learn about personal finance?
Learning to manage money at this stage can eliminate financial mistakes and promote huge financial benefits for the future.
A debt evidenced by a ʺnote,ʺ which specifies the principal amount, interest rate and date of repayment
Loan
A person or business that offers loans at extremely high interest rates
Loan shark
Doing a budget does not:
Make overspending more likely
Personal financial success is primarily the result of:
Managing your money behavior
Building wealth is a_________.
Marathon
Compound interest creates a(n) _______ explosion.
Mathematical
The average __________ can't tell you what's happening on the average TV show.
Millionaire
What is the number one reason students drop out of college?
Money Problems
Saving takes the maturity to say "_____" to purchases.
No
Sometimes you have to tell yourself __________ so later you can tell yourself __________ .
No; Yes
Zig Zigler used to say, "When you aim at _________, you'll hit every time."
Nothing
When you're using the envelope system, it's important that you _________.
Only use the right category envelope
Occurs when money is withdrawn from a bank account and the available balance goes below zero.
Overdraft
All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc.
Personal finance
It is important that you get to know your money __________.
Personality
Automate your wealth building by using ________.
Pre-authorized checking withdrawals
A period of temporary economic decline during which trade and industrial activity are reduced; generally identified by a fall in gross domestic product (GDP)
Recession
To match your bank statement with your checkbook.
Reconcile
Which of the following steps is the First Foundation?
Save a $500 emergency fund.
Compares after-tax income to the money people spend on a variety of items.
Savings rate
What is the second key of a successful financial plan?
Set money goals
On average, how long does it take to become a millionaire in America?
Seventeen years
Saving money over time for a large purchase.
Sinking Fund
Instead of borrowing money for large purchases, you should set money aside in a _________ over time and pay with cash.
Sinking fund
Instead of borrowing to buy something, pay cash by using a(n) _______ ______.
Sinking fund
Which of the following is not a reason your emergency fund should be kept in a separate savings account away from your spending money?
So that your emergency fund savings can earn a lot of interest
Which of the following is something that a typical millionaire would do?
Spend less money than he or she makes
What does it mean to have a negative savings rate?
Spending more money than you make and acquiring debt
If you put what you learn into practice, you can
Tell your money what to do
Save a $500 emergency fund.
The First Foundation
Which of the following is not a true statement?
The credit industry in America has not changed much since 1917.
Why should interest earned not be a factor with your emergency fund?
The emergency fund is not intended to grow wealth.
The saving habits of Ben and Arthur best illustrate which principle of saving?
The length of time money is invested matters.
Why is having a fully funded emergency fund so important when it comes to your financial well-being?
The purpose of an emergency fund is to set money aside for unexpected financial emergencies and to provide a sense of financial security.
The widespread financial insecurity of Americans is primarily because:
The saving rate of Americans is low and many borrow in order to spend more than they earn
Which of the following is not a reason credit is marketed heavily to consumers in the United States?
The use of credit is not socially accepted in the United States.
The zero-based budget is the best method of budgeting because:
The zero-based budget ensures that every dollar you make is assigned a specific purpose
Money today has different buying power than the same amount of money in the future.
Time value of money
This principle suggests that a certain amount of money today has different buying power than the same amount of money in the future. This is due to both the opportunity to earn interest on the money and because inflation will drive prices up, thereby changing the ʺvalueʺ of the money.
Time value of money
A lot of people you think "look" wealthy are completely broke.
True
An interest-bearing account is an account that generates interest income on the available balance in the account.
True
Another reason people avoid budgets is because they never had one that works.
True
Anyone can become a millionaire in this country.
True
Being like everyone else means being broke and in debt.
True
Budgeting is crucial to your financial success.
True
Crisis budgeting means drawing a line when the money runs out and knowing that anyone below the line won't get paid.
True
Debt can cause stress and gets in the way of pursuing your dreams and passions.
True
Debt never solves the problem; it delays one problem while creating another.
True
Emergencies are going to happen, expect them!
True
Having debt keeps you from building wealth.
True
If not managed, the ATM card and debit card have the ability to be budget busters.
True
If you saved $100 per month for forty years, you would be a millionaire.
True
It is possible to get through college and graduate debt-free.
True
Making a plan with your money will remove much of the guilt, shame and fear because you know you have enough.
True
Once you have established your financial plan you need to write it down.
True
Online bill pay allows you to make payments to whomever you wish without having to write a check and send it in the mail.
True
Overdrafting your account is a result of sloppy, lazy money habits.
True
Prior to the 1970's, debt was something most Americans were ashamed of.
True
Rate of return is also called an interest rate.
True
Saving is a learned skill.
True
Savings: If it became important enough, you could save it!
True
Setting up automatic account transfers is the easiest way to build your savings for your emergency fund or large purchases.
True
Some ATMs charge fees for withdrawals.
True
Start investing now, so you don't regret it later in life!
True
Stephen Covey said, "Highly effective people are proactive. They happen to things."
True
The credit system today is structured to accommodate a state of uncertain employment and income instability, utilizing high interest rates and fees to turn huge profits.
True
The envelope system works great for managing spending on things that don't normally have a fixed monthly expense.
True
The first reason people avoid budgets is because it has a straight-jacket connotation. They think they can't do anything if they're on a budget.
True
The number-one cause of divorce in North America today is stress and disagreements over money.
True
To have a budget that works, you need to make sure you're using it to live.
True
True financial security is achieved when your money begins to generate an income—your money starts working for you.
True
We all have strengths and weaknesses when managing our money.
True
Wealth building requires discipline.
True
When developing a personal financial plan, one of the first things you should do is assess your current financial situation. This includes your income, assets, and liabilities.
True
When you're in high school, you won't have the same emergency expenses as your parents.
True
When you're older and out of school, you'll need to grow your emergency fund into a full three to six monthsʹ worth of expenses.
True
Writing and following a zero-based budget will help you avoid overspending and impulse purchases.
True
You don't get $500 by accident; it takes time and hard work.
True
You should do a budget every single month.
True
You should hold off on investing for retirement until you have college or other post-secondary education paid for.
True
You should save money for three basic reasons: emergency fund, purchases and wealth building.
True
Your budget is too complicated if you're up to 66 pages long.
True
ʺPay yourself firstʺ means you should assign a portion of your income to saving and investing every month.
True
Groceries are a:
Variable expense
When a person intentionally invests money in a place where it can earn more money
Wealth building
Managed money ____________.
Works harder
Murphy's law states that "if it can go _____, it will"
Wrong
The best way to manage money is to learn how to manage __________.
You
Cash flow plans do not work when __________.
You leave things out
Which of these is not a key to saving money?
Your income
Which of the following account records would have the most current balance?
Your own account register
A cash flow plan that assigns an expense to every dollar of your income, wherein the total income minus the total expenses equals zero.
Zero-based budget
Seven out of every ten families in America live ________ __ _________.
paycheck to paycheck