Personal finance Final

Which is a monthly fixed expense

rent

which is a monthly variable expense

car gas

which is an intermittent expense

once yearly car registration cost

which is a discretionary expense

concert tickets

expenses that remain the same from month to month

fixed

expenses that fluctuate from month to month

variable

\_______ expenses are often defined as nonessential spending or, in other words, wants rather than needs

discretionary

Expenses that occur at various times throughout the year and tend to be in large amounts

intermittent

form of paying/payment that you "set & forget". It just comes out, or gets pulled from your bank account each month

Auto-Draft / Auto-Deduction

Mr. Veight suggested you DO GET a credit card in high school, but only put \____ on it, and pay it off in-full each month

car gas

If you pay off your credit card bill in full each month NOW, by the time you're 22 you'll have a great \______

credit score

\_____ is an example of a Utility Bill

electric/ electricity

Your paycheck amount before taxes/deductions comes out....

gross pay

Your paycheck amount after taxes/deductions comes out....

net pay

Your highest expense as a 22yr old living on your own (apartment) will likely be:

rent

To quickly calculate Net Pay, you can "unofficially" multiple your Gross Pay by \____

70%

The average American works \____hours per year

2000

If you make a $100,000 per year salary, you probably really make about \____

$70,000

You make a $100,000 per year salary, BUT you're really aggressive with your 401K contributions, your Net Pay is probably

About 60-65% of your Gross Pay

When budgeting for the month, the only pay that matters really, is \____

net pay

If you make $20 per hour and work full time, your annual Gross income is probably about\____

$40,000

If you make $50 per hour and work full time, your annual NET income is probably about\____

$70,000

Net Pay is also referred to as your \_____

take home pay

Taxes come out of your Gross Pay, but so does Healthcare, Retirement Contributions, Union Dues, etc. Those are called:

Deductions / Withholdings

Your biggest wealth-building tool is your \____

income

\________: a written plan for giving, saving, and spending

budget

Only \___% of Americans Admit to Budgting Properly each Month

35

\____ is your 1st priority in your budget. This is where you decide how you'll be generous with the money you have

giving

Assigns an expense to every dollar of your income; the goal is for the total income minus the total expenses to equal 0

zero-based budget

Summarizes all of the income and spending over a certain time period. Basically, the opposite of Zero-based Budgets

Cash-Flow Statement

Most Millionaires....

Work more than 40 hours per week

Which strategy improves your financial life, overall?

Saving early and often in life, throughout every age and job you have

If you drop out of high school, what is the opportunity cost?

Lower Income is projected throughout your career, especially early career

SCARCITY is a concept that revolves around the idea that...

Nothing is unlimited. People have to make choices among alternatives.

Gross Pay is:

Your earnings before taxes and deductions

You work at Wendy's. You make $15 an hour. You worked 3 hours. About how much will your NET pay be?

$31

Financial experts recommend saving when YOUNG, because that allows compound interest to work FOR you over time.

true

Owning shares of stock provides the shareholder with:

A piece of ownership in the company

Credit CAN be a great thing, if used intelligently. A key advantage of getting credit is that it helps people:

Get a good or service TODAY, but pay for it later (over time)

Car loans: You choose the 72 month loan instead of 36. The interest rate will be __, but the monthly payment will be __

high,low

\

Car Loan: If you choose a 72month loan over a 36month loan, you will pay LESS overall for the car with the 72 month loan

false

You get a bank loan @ age 22. You're a risk for nonpayment @ that age & with your lack of working history, so you will:

Have a higher interest rate than a 40yr old, who's less of a risk to repay

"Pay Yourself First" means:

You set money aside for long-term savings before you just spend & spend now

Using a Debit Card to make purchases is just like writing a check, which comes out of your bank checking account.

true

Your credit score helps banks determine your interest rate on a loan that you want for your car &/or house

true

Sharing your S.S.N. with online surveys that promise to pay cash for your answers, you'll be @ risk of Identity Theft

true

A well managed & organized monthly budget helps a person spend more than they make each month

false

If you overdraw your bank account by writing a check you can't cover, you'll be hit with an overdraft fee by the bank

true

When it comes to Personal Finance, the MATH is easy. What's challenging is managing your:

behavior

RENT is the same amount each month, therefore it is which type of monthly expense:

Fixed

Entertainment and Experiences (fun stuff) are NOT the same amount each month, therefore they're which type of expense:

variable

A zero-based budget is a great budgeting method because it ensures every dollar you make is assigned a specific purpose:

true

At your age, how much should your emergency fund be?

500

In your "Savings Project", you learned the 3 main reasons to save. Which is NOT of the 3 reasons:

Lend money to friends and family

If you don't make a monthly budget, you're setting yourself up to spend more than you earn

true

An account with compound interest will you earn you way more over time than an account with simple/regular interest.

true

A zero-based budget makes you assign a category for every dollar you'll make in a month, so it's great for helping you:

avoid impulse buys

All of the decisions and activities of an individual regarding their money, including spending, saving, budgeting, etc.

personal finance

Your first Savings Goal should be:

Saving $500 in an emergency fund

Which of these would be Discretionary Expense?

Buying new shoes for $250 that you don't need, you just want them.

Why is budgeting so important?

Gives control of your money & sets you up for financial success in future

The first step you should take when you want to make a large purchase is:

Decide how much you'll need to save & the time frame you want to save it in

The best way to build wealth is to start investing early. You should start investing money:

Once you're living debt-free, and have 3-6 months of living expenses save

It's not IF an emergency will happen, but

when

What is a good way to make sure you're creating a budget that's realistic?

Check your calendar so you can plan for upcoming monthly expenses.

The purpose of an emergency fund is to

Be able to cover an unexpected expense with cash and protect you from debt

Why do stores rarely advertise the full price of big purchases like smartphones?

By showing you the monthly payment, they make the product seem affordable

The "3" main reasons for saving your hard-earned money are

Emergencies, large purchases, and wealth building

Once you're out of school, have started your career, and have zero debt, your emergency fund should have

3-6 months of living expenses

Making the right choices with your money, managing your money, involves knowing how....

Earning, budgeting, saving, spending, and giving affect your money

What is The First Foundation?

Save a $500 emergency fund

A money principle to keep in mind is to live on \____you make

Less than what

This occurs when a person's income is all devoted to expenses which means that little to no money is put in savings

Living Paycheck to Paycheck

When you set financial goals, they should be . . .

Specific, measurable, time-sensitive, yours, and written out/down

Personal finance is 20% and 80%:

knowledge; behavior

Using credit/loans & credit cards has not always been a socially accepted practice, but it has become . . .

Normal in American culture

If your assets total more than your liabilities (debts), you will have a \____ net worth

Positive

Your money personality impacts . . .

Your decisions, and overall how you handle money

What is financial literacy?

Knowledge/skills necessary for people to be informed &manage their finances

What are the "Four Walls"?

Food, utilities, shelter, and transportation

What does a budget show you?

How much money you plan to come in and go out during the month

Going to the movies is an example of what types of expenses?

Discretionary and variable

Why is tracking your expenses throughout the month important?

It gives you insight into whether you're sticking to the budget you set.

What is a way to stay accountable to reaching your financial goals?

Using a person you trust (parent) to help keep you on track with $$ & goals

A common misconception is that budgeting will keep you from having fun, when in reality budget:

Gives you "permission" to spend

Your monthly rent payment is an example of a variable expense.

false

What is the Third Foundation?

Pay cash for your car

Which of these would count as a legitimate reason to use your emergency fund?

Your car battery died

ACCORDING to Dave Ramsey.... One of the main reasons we build wealth is so that we can:

Give to those in need

\______is a millionaire's best friend

compound growth

If you really want to save money, you've got to

Live on less than you make

Something that credit card commercials don't show you is . .

People making payments for months or years on those credit card purchases

Banks and lenders use credit scores to determine . . .

The likelihood that someone is able to repay debt

When you finance (3/4/5/6 year loan) a new car, you will end up paying more than the sticker price.

true

While it may not always appear so, the majority of Americans live paycheck to paycheck.

true

Which of the following is part of the formula that determines a person's FICO score?

Their history of payments made to lenders

There are certain things, like renting a car or booking a hotel room, that you cannot do without having a credit card.

false

Leasing a car is a method of financing where someone\______________

Makes monthly payments on but does not own the vehicle

What is The Second Foundation?

Get out and stay out of debt

Credit card companies make the most profit from\____

Charging interest to customers who only pay part of their monthly debt