Econ Test Cards
What are key things to know about recurring expenses
1) These are generally needs, not wants, like food, power, rent/mortgage, insurance bills, etc 2) They can be planned for 3) You should prioritize your recurring expenses over your wants when you create your budget 4) Some can be stopped or lowered (like a netflix subscription)
What statement is true about investing: 1) Savings accounts earn higher rates of return (on average) than the stock market 2) Investing is riskier than putting money in a savings account 3) Investing is best for short-term financial goals 4) Investing is a guaranteed way to make money
2) Investing is riskier than putting money in a savings account Investing is for the long term, and can have lots of risk and fluctuation over the short term, but given long enough periods of times will average much higher rates of returns than putting money in any type of cash savings account.
Which of the following is not a benefit of using a budget: 1) Help decide the importance of expenses 2) Help you keep track of your money 3) Help you purchase anything you want 4) Help you make plans to reach your financial goals
3) Help you purchase anything you want
Which is False: 1) Savings Accounts may require you to maintain a minimum balance to avoid paying a fee 2) Savings Accounts are best used to store money for longer-term goals 3) Savings accounts don't usually pay interest on the money you deposit 4) Savings Accounts limit the number of withdrawals that can be made each month
3) Savings accounts don't usually pay interest on the money you deposit Remember - Savings accounts are not meant for daily transactions. They're meant to keep money in them for longer periods of time, so you earn interest on your money. Thus, they may limit the number of withdrawals you can make each month. Use the for longer-term goals. They may also require a minimum balance to avoid fees.
Which is not true about unexpected expenses 1) They could impact your budget in a negative way 2) They could interfere with your ability to pay bills 3) They should be planned for so you can keep within your budget 4) They do not occur if you have a budget
3) They should be planned for so you can keep within your budget
Which of the following statements about stocks is true: 1: A stock is a type of savings account that pays interest based on current interest rates in the money market 2: A stock is a type of debt investment that acts like a loan 3: A stock is a share of ownership in a company 4: A stock is a type of investment that invests in a mix of different types of investments
3: A stock is a share of ownership in a company
What is a risk management strategy you could use to protect your home: A) Buying a home security system B) Installing cameras on your home C) Wearing reflective clothing to wear while biking
A and B are correct. Biking is not home
Which type of bank account typically offers the least interest
A checking account
What is not a common feature of a financial institution: Checking and Savings Accounts Access to Investment Advice Direct Deposit Paper Checks
Access to Investment Advice
If you have decided to claim a credit or deductions, which credit or deduction should you take
All credits and deductions that you are eligible for
What is a 529 plan
An account that lets you put money into it specifically to spend on your college education. It can be opened well before college and have money saved in it over time
What helps you prepare for unexpected expenses
An emergency fund
What are possible red flags or signs of a scam when buying a car
Being told your financing fell through Charging of excessive fees
An example of a risk management strategy a) wearing a seatbelt while driving b) carpooling c) wearing a helmet while biking
Both a & c. B might save money, but it doesn't limit your risk
What are some good ways to prevent unnecessary spending
Cancel unused recurring expenses Use an app to find the cheapest gas station Make your own food more often Don't buy all of your wants all at once
What three things are the best use of loans
Cars, Houses and Education (education is debatable, but this class/test says its good). It's bad to use loans for stupid, frivolous stuff like airline tickets, vacations and other wants
what type of bank account is best for every day transactions
Checking Account
T/F Your financial institution can't help you if there is a mistake on your bank account statement.
FALSE
What are good and bad reasons to use an emergency fund
Good: Repair laptop/car/other necessary things that you must use to do your job/stay alive/etc Bad: Anything that you do that isn't necessary, like concert tickets, new shoes (if you already have some) and a new phone (if you have a working one already)
What should you do before you use an ATM
Inspect the ATM and its surroundings to make sure it is safe to use
SOmething people buy to protect themselves from losing a lot of money in the event something happens to them or their property is called
Insurance
Why is it important to complete the Free Application for Federal Student Aid
It allows you to be eligible for many scholarships It allows you to be eligible for some grants It allows you to be eligible for federal student aid
What are the benefits of attending a local community college?
It can be cheaper to earn an associates degree there then transfer to a four year college to finish You can live at home and save dorm fees while earning an associates degree Choosing a local community college within closer driving range saves on transportation costs
Why is figuring out the unit price of something useful when shopping
It helps you determine the best deal
What is a W-2 form
It shows how much you were paid by a company in a year and how much taxes you have paid (or had withheld) from your paycheck. It doesn't tell you how often you will be paid, or how much to withhold from your paycheck or how much you actually own the government. It only tells you how much was taken out of your paycheck during the year and sent to the government (your class calls this "paying taxes", which isn't a great term, but just remember that.
How can you avoid spending more than what is in your bank account
Keep your own records to compare with your financial institution's records
Why is leasing/renting generally a better idea over short periods of time
Leases are generally for a month or a year
Is it ever ok not to have health insurance
No
What are the benefits to paying of your credit cards in full each month
No late fees No interest that you have to pay Your credit score will increase
Which type of interest in a qsavings account will earn you the most money
One that compounds interest daily
What is important when choosing a credit card
Penalties and Fees Credit Limit Annual Percentage Rate (APR - this is the amount of interest you pay when you don't pay the card off every month) What isn't important - the look of the card
How can you protect yourself from identity theft and fraud
Placing a credit freeze with the credit bureaus. Also, you can monitor your credit report frequently (monthly or so)
If you get into a car accident, what might increase because you will be considered riskier for insurance companies to cover
Premiums. This is how much they charge you each month/quarter/year to have an insurance policy with the company. The riskier you are, the higher the premium you have to pay will be
Besides Salary, you should also understand what benefits will be included as part of your job. Name some benefits
Retirement Account matching contributions Healthcare, dental and/or Vision Insurance Disability Insurance Life Insurance Accidental Death/Dismemberment Insurance (Called AD&D Insurance)
WHich is not a possible tax or deduction you could have withdrawn from your paycheck: State Income Tax Retirement Contributions FICA Sales Tax
Sales Tax
List from lowest to highest rates of return for Savings Accounts 1) Simple Interest Monthly 2) Compound Interest Daily 3) Simple Interest Monthly 4) Compound Interest Monthly
Simple Interest Monthly Compound Interest Monthly Simple Interest Daily Compound Interest Daily
What are ways to track your spending in a budget
Spreadsheet, Envelope Method, Applications
How does the government pay for roads, schools, emergency services and a bunch of other stuff that isn't necessary and generally wasteful?
Taxes
How is an advertisement different from a comment from a regular consumer
The advertisement is likely one sided
What can affect if a public or private university is affordable
The amount of financial aid that they offer. Remember - private universities don't charge less for in-state residents. Also - interest rates aren't charged by universities typically, so don't think that's the right answer, even though it sounds like it should be one
What is an insurance deductable
The amount of money you owe before insurance will cover the rest of the bill
What is net pay
The amount you are paid after all taxes and deductions are removed from your paycheck
What payment option takes money out of your bank account immediately
The correct answer the test asks for is "debit card" However, as your dad, writing a check should ALWAYS be considered to be taking money out of your bank account immediately too, even though it may take a few days to process through the system
It does not make sense to avoid post secondary education because of its cost since in the long run:
The salary you earn with a degree will pay back the cost of college over the your career
What can insurance protect you from: Theft Financial Loss Contract Fees
Theft and Financial Loss
What are the reasons to lease, rather than buy, a home
They are planning on living there for a short period of time. Same can be said about leasing v/s buying a car. It's a short term thing
Describe a check cashing company or a payday loan company:
They make it easy to fall into a loan cycle that is hard to get out of They offer bad deals where you'll owe a lot more than you borrow They can take a percentage of your check on top of fees They charge extremely high interest rates It is a bad idea to ever do business with one, they are scams and prey on people who are very poor.
Charitable donations, entertainment expenses and financial goals are all what
Things to consider when creating a budget
Why do you need your bank account and routing numbers when you are using tax preparation servics
To indicate where tax refunds should be sent
What's a W-4
To inform your employer how much federal income tax to withhold from your paychecks
What are additional costs beyond tuition for college
Transportation Textbooks and Supplies Room and Board
Earning a degree can be expensive, but why might it be worth it
You are more likely to earn more money over your lifetime than if you did not have a degree
What is benefit for having a good credit score
You are more likely to have more loan offers with better terms (interest rates)
What is not true about the Free Application for Federal Student Aid You can fill the form out online or on paper You can't submit the form until January 1st each year Each state may have a different deadline for state financial aid You can fill out the FAFSA if you are an independent of dependent
You can't submit the form until October 1st of each year. Not January 1st
What can you do when you're behind on a loan
You might be able to defer the loan, but still pay the interest You might be able to pay a smaller amount now and the rest after you get paid next You can try to borrow money from friends or family One thing you won't be able to do is get out of your loan
What are the consequences of not having insurance
You must pay all costs for health care yourself
Why is a secured loan less costly than an unsecured loan
You must use collateral for a secured loan. This leads to lower interest rates and less risk for the financial institute
What are some things you should consider when setting a budget
Your financial goals Needs and Wants Savings
What should you consider when creating a budget
Your financial goals, current expenses and income
Which forms of payment are linked to a bank account, thus your spending is limited to the amount of money that is in your account
checks and debit cards
Insurance that covers damage to your car from an accident is called
collision insurance
When looking for pre-approval on a car loan you should
compare pre-approval offers and select the one that is best for you
Making a good purchasing decision requires
comparing prices and features reading consumer reviews waiting for a sale on the item, if possible
Bank statements, credit statements and records of cash expenses help you estimate your
expenses
Federally funded grants require the student to
have financial need only
Generally the more education you receive, the ______ will be
higher your lifetime earnings will be
what does liability insurance cover and not cover
it covers: injury to someone else, and damage to their property. It does not cover: injury or damage to yourself or your property
To maintain a good credit score you must
manage your debt wisely and always make your payments on time
How can you get reliable info on a product
online reviews - nothing that relies on advertisements or people who have been paid to make the product seem as good as possible (like influencers)
What is a positive thing to using a credit card
paying it off on time can help build your credit history
To file federal and state taxes you must:
prepare different forms for each type of government (if your state requires it). You can use tax prep software to do both
Living at home while in college can save money on
room and board but it can increase costs for transportation