Personal Finance Basics Quiz

Financial Planning

• Budgeting Basics: Track income (salary, side gigs, etc.) and expenses (fixed and variable). Set financial goals (short-term and long-term). Create spending categories (fixed costs, variable costs).
• 50/30/20 rule: Allocate income—50% needs, 30% wants, 20% savings/debt.
• Build an emergency fund: Saving 3-6 months' worth of living expenses for emergencies.
• Review and adjust budget regularly.
• Avoid impulse spending (24-hour rule).
• Cut unnecessary costs.
• Prioritize debt repayment (high-interest debt first). Use strategies like avalanche or snowball.

Evaluating Finances

• Assess income sources (salary, side gigs, investments, etc.). Assess income stability.
• Evaluate savings and investments (emergency fund, retirement accounts, other investments).
• Review debt (types, interest rates, balances).
• Calculate debt-to-income ratio (monthly debt/monthly income).
• Pay down high-interest debts and consider refinancing/consolidation.
• Review insurance coverage (health, life, auto, home, disability).
• Calculate net worth (assets minus liabilities).
• Seek professional guidance (financial advisor, tax professional).

Creating a Budget

• Question your needs and wants.
• Set guidelines to balance budget.
• Track, trim, and target spending.

Budgeting Benchmarks

• Tips for students: Setting budgeting habits, identifying financial goals, planning for new responsibilities; planning for a new job.
• Planning as a new employee: Re-evaluate budget based on new income/expenses; lower expenses, increase savings for future goals; take advantage of employer benefits.
• Challenges for parents: Raising children is expensive (approx $245,000 for birth to age 18). Create realistic financial goals covering family needs, education funds, and other expenses.
• Budgeting as a retiree: Plan for retirement early, seek information on available government programs, like Social Security and Medicare; consider part-time work.

Saving Basics

• Create a budget.
• Pay yourself first (set aside 10-12% of income).
• Save wisely (research options with favorable interest rates).
• Prepare for the unknown (emergency fund). Set clear realistic financial goals. Use SMART goals (Specific, Measurable, Attainable, Relevant, Time-bound)
• Track progress making savings goals clear and achievable.

Growing Your Money

• Prioritize savings, automate transfers.
• Track spending to identify areas for savings and adjust habits.
• Collect loose change.
• Cancel unused subscriptions.
• Emphasize compound interest and Rule of 72 (to estimate time to double savings).
• Building an emergency fund (3-6 months of living expenses).
• Automate emergency fund transfers. Place money in safe, easily accessible accounts.

Financial Institutions Basics

• Opening a checking account: Security, convenience, easy access, bill management, earn interest.
• Choosing checking accounts: Consider free options, direct deposit, minimum balances, ATMs, and fees.

Debt Cards and Prepaid Cards

• Smart debit card practices (monitoring balances, aware of limits, cash back, notifying bank).
• How prepaid cards work (load money, deduct as purchases).
• Prepaid cards as financial tools (budgeting tool, alternative to check-cashing).

Mobile Banking

• Simplify money management, access financials from anywhere, 24/7 access, no-fee options.

Credit Basics

• Annual fee, APR (Annual percentage rate), balance, credit bureau, credit line, credit rating, grace period, introductory rate, minimum payment, overdraft protection. Understand credit terms for informed decisions.

Credit Scores and Credit Reports

• FICO score (300-850), building good credit, managing debt.
• Importance of checking credit reports, identifying errors.
• Credit resources (free reports, bureaus, and their contact information). Secure credit cards.
• 20-10 rule: Avoid exceeding 20% of annual income and 10% of monthly income in debt payments

Debt Basics

• Calculate monthly debt payments, determine monthly income, calculate debt-to-income ratio, convert to percentage.
• Ideal debt-to-income ratio (10% or less). Avoid high debt levels. Calculate net worth (assets- liabilities). Pay off high interest debts first.
• Prioritize with the snowball or avalanche method.
• Methods for rebuilding credit: credit builder loan, secured credit card, authorized user, timely payments. Ensure your financial information is reported to the three major credit bureaus.

Identity Theft and Fraud Prevention

• Know your rights, protect finances (credit reports), secure personal information (passwords, SSNs)
• Identify potential warning signs and scams.
• Implement safety measures when making online purchases. Review bank statements for suspicious activity. Use safe online platforms.
• Practices for preventing fraud. Identify theft protection while traveling (safe financial practices).
• Tools to protect identify (report identity theft, contact proper agencies)

Going to College

• Higher education's value (better employment opportunities).
• Cost of higher education. Student loan debt.
• Factors to consider regarding various educational institutions (Trade schools, 2-year colleges , 4-year colleges).
• Preparing for college. Steps before enrolling, standardized tests.

Buying a Car

• Cost considerations. Various factors influencing car purchase processes (down payment, mortgage payments, leasing).
• Compare between renting and buying a home, weighing pros and cons of each.

Renting an Apartment

• Co-signing and lease responsibilities
• Breaking a lease.
• Penalties for breaking a lease.

Landing a Job and Hiring Process

• Hiring processes vary by industry.
• Researching industry demands, skills, and credentials. Evaluating job opportunity flexibility.
• Weighing costs of relocation.
• Exploring career growth opportunities.

Health Care

• Types of health insurance plans (bronze, silver, gold, platinum).
• Importance of health insurance coverage and costs.
• Considering costs based on individual needs and circumstances.
• Importance of understanding health insurance coverage

Family Lifetime Planning and Elder Care

• Planning for retirement, debts, and taxes, as well as other financial aspects of family life and elder care

Retirement

• Proactive planning is crucial.
• Understand your options, including 401(k), IRAs, and annuities.
• Financial planning tools, emergency funding.
• Handling unexpected expenses (emergency fund).
• Proactive approach to living and retirement. Methods of estimating future savings and expenses.

Making Purchases Online and Selling Online

• Online shopping safety (protect personal information).
• Online layaway, installment, and subscription services.
• How to sell online (used, new goods, services).
• Safe selling practices (use secure platforms, reputable methods, provide honest descriptions).