Personal Finance Quiz: Making the Right Money Choices

Questions and Answers

True or false: Voting can lead to financial freedom and hope?

True

To know your net worth, you subtract your liabilities from your:

Previous net worth

Assets (correct)

Other liabilities

Net income

True or false: Being a spender has many more positives than being a saver?

False

A _______ financial goal takes up to two years to reach.

short term Signup and view all the answers

Any important money principle to consider is that you should blank and blank your money.

save and invest Signup and view all the answers

What should you always make sure you have?

a budget Signup and view all the answers

What is the first foundation?

Save a $500 emergency fund Signup and view all the answers

Personal finance is 20% blank and 80% blank.

head knowledge; behavior Signup and view all the answers

True or false: It is possible to pay for college with cash?

True Signup and view all the answers

Your money personality impacts?

how you handle money. Signup and view all the answers

Making the right choices with your money involves knowing how:

Earning, budgeting, saving, spending, and giving affect your money Signup and view all the answers

What was the purpose of the New Deal passed by Franklin D. Roosevelt?

To promote economic recovery and social reform. Signup and view all the answers

What is financial literacy?

The knowledge and skill-based necessary for people to be informed consumers and manage their finances effectively Signup and view all the answers

Without any _______ you can be outrageously generous.

limits Signup and view all the answers

What association made borrowing money to attend college much easier in 1972?

The Student Loan Marketing Association Signup and view all the answers

What is the fifth foundation?

Building wealth and giving. Signup and view all the answers

Savers have a tendency to be:

Strict with their money and not spend any of it Signup and view all the answers

After World War I, credit became more socially acceptable due to:

The increase in demand for products. Signup and view all the answers

As a single adult, you should:

Keep managing your money as a priority. Signup and view all the answers

When setting financial goals, they should be:

Specific, measurable, time-sensitive, yours, and written Signup and view all the answers

What is the best way to avoid running out of money too quickly?

Make it a habit to plan and set goals for your money. Signup and view all the answers

What are the five foundations?

An essential personal financial action plan. Signup and view all the answers

Using credit has not always been a socially accepted practice, but it has become:

Normal in American culture. Signup and view all the answers

True or false: Banks got into the credit business before 1920 because charging exceptionally high interest rates was legal?

False Signup and view all the answers

Personal finance is all the financial decisions an _______ must make in order to earn, budget, save, spend, and give money over time.

individual or family Signup and view all the answers

True or false: You are either only a natural saver or a natural spender; you cannot have a balance of both.

False Signup and view all the answers

A principle to keep in mind is to live on _______ than you make.

less Signup and view all the answers

What does living paycheck to paycheck mean?

Living paycheck to paycheck occurs when a person's income is devoted to expenses with little to no savings. Signup and view all the answers

To gain an understanding of your personal finances, you should know:

Where you stand financially, how much income you have, and your goals. Signup and view all the answers

If your assets total more than your liabilities, you will have:

Positive net worth. Signup and view all the answers

Why is personal finance dependent upon your behavior?

Because personal finance is 20% head knowledge and 80% behavior. The way you behave with your money will determine your net worth and financial state. Signup and view all the answers

How are assets and liabilities connected to net worth?

Assets are things with value; liabilities are debts. You subtract liabilities from assets to get your net worth. Signup and view all the answers

Contrast the differences between short, medium, and long-term financial goals.

A short-term goal takes up to two years to reach, medium-term takes up to five years, and long-term takes longer than five years. Signup and view all the answers

Why should you be aware of whether you are a saver or a spender?

To understand how you manage money and to communicate effectively about finances. Signup and view all the answers

Identify the five foundations and describe each of them.

<ol> <li>Make a $500 emergency fund; 2. Get and stay out of debt; 3. Pay cash for your car; 4. Pay cash for college; 5. Build wealth and give.</li> </ol> Signup and view all the answers

Explain how your money personality affects your spending behavior.

Your money personality influences how you view and manage your finances, affecting your saving and spending habits. Signup and view all the answers

Study Notes

Personal Finance Fundamentals

True or false voting can lead to financial freedom and hope: True
Net worth is calculated by subtracting liabilities from assets.
Being a spender has more negatives than being a saver: False.
A short term financial goal takes up to two years to achieve.
Important money principles include the need to save and invest.

Financial Management Practices

Always maintain a budget for effective financial management.
The first foundation of personal finance is to save a $500 emergency fund.
Personal finance comprises 20% head knowledge and 80% behavior.

Education and Financial Readiness

It is indeed possible to pay for college with cash: True.
Your money personality significantly influences how you manage finances.

Financial Decision Making

Managing money involves recognizing how earning, budgeting, saving, spending, and giving affect your overall financial health.
Franklin D. Roosevelt initiated the New Deal during the Great Depression to promote economic recovery and social reform.
Financial literacy equips individuals with the skills necessary to be informed consumers and manage finances effectively.

Historical Context

The Student Loan Marketing Association was established in 1972, making it easier to borrow money for college.
The fifth foundation of personal finance involves building wealth and giving.

Behavioral Insights

Savers tend to be strict with their money, avoiding unnecessary expenditures.
Post World War I, credit became socially acceptable, reducing reliance on predatory lending practices.

Goal Setting and Planning

Financial goals should be specific, measurable, time-sensitive, and personally relevant.
The best strategy to avoid running out of money is to plan and set goals consistently.

Foundations of Financial Planning

The five foundations form the basis of a personal financial action plan.
Credit usage has transitioned to a normalized practice in contemporary American culture.

Knowledge vs. Behavior

Personal finance is defined by the financial decisions an individual or family must make over time.
Being strictly a saver or spender is a misconception; balance between both is possible: False.
Living paycheck to paycheck means most income is used for expenses, leaving little for savings.

Understanding Finances

To understand personal finances, one must know current financial status, income, and goals.
When assets exceed liabilities, the financial outcome is termed positive net worth.

Relationship to Behavior

Personal finance relies heavily on behavior; the balance of knowledge and behavior impacts net worth.
Assets equate to valuable possessions, while liabilities represent debts; net worth is derived from the difference.
Short-term financial goals are achievable in up to two years, medium goals within five years, and long-term goals take longer than five years.

Financial Awareness

Being aware of whether you are a saver or spender helps facilitate discussions around financial management.
The five foundations of personal finance, including establishing an emergency fund and avoiding debt, help manage finances effectively.

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Description

Test your knowledge on key concepts from Chapter 1 of Personal Finance. This quiz covers important terms, definitions, and true or false statements regarding financial literacy. Prepare to solidify your understanding and set the stage for financial success.

Revised Chapter 1 Personal Finance Review