SFL 260 Exam 1

What are the 4 principles upon which the stewardship perspective is based? (the Whats)

1. Ownership- God owns everything 2. stewardship- meet all needs and as many worthy wants as possible 3. agency- make wise financial choices to save and sacrifice 4. accountability- to each other and to God

what are the three legit debts?

1. affordable home 2. affordable transportation 3. financially- rewarding education

What are 5 goals of effective cash management?

1. convenience (easy access) 2. cost (no fees low penalties 3. consideration (personal attention) 4. security (low risk) 5. gain (perks/interest)

what two perspectives can family finance generally be viewed?

1. eternal perspective 2. worlds materialistic

Three things to remember

1. life is hard but you can do hard things 2. When life doesnt go as planned, don't get frustrated... make the best of it 3. Things take time

the eight hows...

1. pay the lord first in tithes, fast offerings, and other contributions 2. Create, use, and update a budget 3. Minimize and eventually eliminate debt 4. Prepare for emergencies and build a reserve - Financial reserve- cash or other liquid assets held to cover 3-6 months of emergency expenses. Include tithing as a debt worth 10% of your income when you are considering what type or house payment you can afford. Avoid home equity loans, and sign up for a 15 year mortgage instead of a 30-year mortgage. 5. Invest early, consistently, and wisely 6. Protect yourself and your family thorugh adequate insurance 7. Share finances as equal partners in marriage 8. Teach your children and family about finaces

What are 5 repeating steps for developing and implementing a budget?

1. set goals to address family needs and wants to determine what those needs and want will cost 2. categorize your current income and spending 3. allocate income to budget categories that will provide enough money to meet all needs and some wants 4. implement your budget by tracking income and expenses against your budget 5. adjust your budget as needed

what are the four why's of family finance?

1. spiritual: to bring us to christ 2. temporal: to help us become wise stewards 3. individual: to accomplish your divine mission 4. family: to return with your family back to heavenly fathers presence

Most recent inflation rate

1.9%

FDIC insures deposits at commercial and internet banks for up to???

250,000 per depositr 500000 for joint depositors *NCUA insures depostis at CU for the same amount

The general rule of thumb for a family emergency fund is to have sufficient liquid assets to cover _________ of family expenses.

3-6

average cost of the first bounced back check?

30.47

According a statement attributed to Albert Einstein, what is the eighth wonder of the world? A. Compound interest B. Inflation C. Mutual funds D. The theory of relativity

A

In Time Value of Money calculations, PV stands for A. Present Value B. Preset Value C. Previous Value D. Principle Value

A

APY stands for

Annual Percentage Yield also known as effective annual yield

formula for APY

Annual percentage yield= annual interest earned/beginning balance (for that year)

In order to budget the better way, you should A. Contribute to savings only after you have paid all of your other expenses each month B. Pay the Lord first and then pay yourself C. Pay yourself first and then pay the Lord D. None of the above

B

On a net worth statement, assets such as clothing, automobiles, furniture, and electronics should be valued at: A. "Amazon.com" value B. Current market value C. Intrinsic value D. Purchase price E. Replacement cost

B

What is "mad money?" A. A fund from which you can spend when you are angry B. Money spent for presents when you have offended your spouse C. A certain amount of money allocated to each spouse each month that they can spend however they want, without accounting to the other spouse D. Money that puts a family "over the edge" in their finances. Mad stands for Mutually Assured Destruction

C

what is the basis of an emergency fund

Cash!

All of the following expenses except __________ are variable expenses. A. Clothing B. Entertainment C. Food D. House payment (principal and interest) E. All of these are expenses are variable expenses

D

In Time Value of Money calculations, FV stands for A. Forever Value B. Forward Value C. Front Value D. Future Value

D

Lump sum problems do not utilize which function on the financial calculator? A. PV B. N C. I/YR D. PMT E. FV F. Lump sum problems always use all of these functions on the financial calculator.

D

On a net worth statement, what part of a credit card balance should be included under liabilities? A. Only the interest paid in that month B. The average monthly interest paid during the preceding 12 months C. The average outstanding balance during the preceding 12 months D. The current outstanding balance

D

All of the following records except __________ should be kept for at least seven years. A. Access to bank statements B. Contributions receipts C. Income tax returns D. Medical receipts E. All of these documents should be kept for at least seven years

E Tax deductible receipts (lds.org/donations will have these online for tithing, etc.) Donation receipts from Deseret Industries Access to bank statements Access to credit card statements Medical receipts W-2 forms Other documents for deductions

True or false. A student loan has an offsetting asset that can be shown on a balance sheet.

False

True or false. An income and expense statement does not take into account income and expenses that are in the past. It is solely designed to predict what your income and expenses will be in the future to help you budget your money for the coming year.

False

True or false. Record keeping only pertains to financial records.

False

True or false. Rent is considered a liability when calculating one's net worth.

False

True or false. The nominal return is the return on an investment after the impact of inflation and taxes is taken into account.

False

Certificate of Deposit (CD)

Funds must be kept in the account for a fixed amount of time.

According to the acronym HALT, you should avoid making financial decisions when you are

Hungry, angry, lonely or tired

know the formula for interest earned or interest paid

I = PRT

time value of money

Money's potential to grow in value over time. The relationship between time, money, a rate of return, and earnings growth.

what does APR stand for and what is another name for it

annual percentage rate. This is the percentage that the principal dollar amount will grow if interest compounds annually. another name for it is nominal interest rate

monetary assets

cash, accounts receivable, or a note receivable where the amount is a fixed, stated amount

What records should you keep for as long as your the owner?

contracts, home purchase improvement records, life insurance policies, loan document, real estate deeds, receipts for items under warranty, service contracts and warranties, stock and bond certificates, vehicle titles

interest

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

commercial banks

for profit, owned by stockholders

internet banks

for profit, owned by stockholders but slightly higher interest rates but no onsite services

opportunity cost

the loss of potential gain from other alternatives when one alternative is chosen

Whenever interest compounds annually, the APR and the APY are....

the same!!!

what is the core purpose of SFL 260?

to become a wise steward of your material resources in such a way that you, your spouse, and your family gain eternal life

True or False. Credit unions do not need to make a profit and therefore offer higher rates on savings accounts and lower rates on loans than commercial banks do.

true

the APY or annual percentage yield will be the same no matter what beginning balance you have

true

current market value

what you could sell assets for in todays open market.

When is APY greater that APR? When are they equal?

when the interest rate compounds more than once a year. and same when interest only compounds annually.

what does it mean to be upside down in your mortgage?

when you owe more than the house is worth

SMART

specific, measurable, acheivable, results-focused , time-bound

how do your investments beat inflation?

savings dont bond accounts beat it by a little with little risk stock accounts beat inflation good but with more risk (at least on the short term)

True or false. Budgeting is the process of planning, in advance, how to spend money.

True

True or false. The formula for net worth is the total value of your assets MINUS the total value of your liabilities.

True

Inflation

a general increase in prices and fall in the purchasing value of money.

what is an income and expense statement?

a record of a family's past cash inflows and outflows.

A family net worth statement

a snapshot of your family Present financial situation. Net worth= current market value of your family assets MINUS liabilities you have debt on at a particular date

what is one way to strengthen our relationships related to finances?

interact with an abundance of STP specific true positive

what is an emergency fund?

liquid assets to meet immediate and expected needs

what category is often overlooked in a budget

miscellaneous

credit unions

non profit, owned by members