The saving habits of Ben and Arthur illustrate all of the following principles EXCEPT:

The amount of the initial investment is the key

Which of the following BEST describes how Americans are being outsmarted by lenders?

We use credit even if it destroys our financial well being.

Paying yourself first describes all of the following EXCEPT:

Paying your credit card bills prior to buying food

The zero-based budget is the best method of budgeting because:

It ensures every dollar you earn is given a specific purpose

Why was the use of credit uncommon prior to 1917?

All of the answers are correct reasons

All of the following explain why emergency funds should be in a separate savings account except

So your emergency savings can earn a lot of interest

Which of the following is NOT a reason that people fail to save money:

They account for every dollar they spend

Key components of financial planning include all of the following EXCEPT:

Allowing your financial planner to make all your decisions.

What does it mean to have a negative savings rate?

Spending more money than you earn

During the Great Depression, policymakers convinced commercial banks that:

Consumer credit could be profitable

All of the following are benefits of understanding your money personality EXCEPT:

It allows you to excuse excessive spending as your nature

The widespread financial insecurity of Americans is primarily because:

Their saving rates are low and many borrow to spend

Why is having an emergency fund so important?

It is for unexpected financial emergencies

Which of the following best explains why students should learn about personal finance?

It can eliminate costly financial mistakes.

Which of the following is FALSE?

A budget summarizes spending and saving over a year

Which of the following is NOT a true statement?

The credit industry has not changed much since 1917.

Why should interest earned NOT be a factor with your emergency fund?

It is not intended to grow wealth

For which of the following should you save?

all of these answers are correct

Which of the following is NOT a record keeping feature of banks?

Customer service reconciles your account for you

Which of the following is something that a typical millionaire would do?

Spend less money than they earn

Which of the following is NOT one of the three basic reasons for saving money?

Having money to to lend to friends

Which of the following is a consequence of overdrawing your checking account?

All of these are consequences of overdrawing your account

Which explains why income ALONE does not determine wealth?

Income does not dictate spending and saving behavior.

Which of the following is NOT a factor in becoming money smart?

Learn how to read your credit card statements

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Personal Finance Review 1 (Chapters 1-3)

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Review of Dave Ramsey Personal Finance (Chapters 1-3)

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Questions 50

Answers

1
The saving habits of Ben and Arthur illustrate all of the following principles EXCEPT:
The power of compound interest
The amount of the initial investment is the key
The rate of return matters
The length of time money is invested matters
2
Which of the following BEST describes how Americans are being outsmarted by lenders?
We use credit even if it destroys our financial well being.
We are taught that we can buy happiness.
Buying things on credit has become part of our culture.
We are driven by consumerism.
3
Paying yourself first describes all of the following EXCEPT:
Paying your credit card bills prior to buying food
Assigning a portion of your income to savings
Assigning a portion of your income to investment
Assigning a portion of your income to your household bills
4
Personal financial success is primarily the result of:
Managing your money behavior
Generous welfare and unemployment programs
Winning the lottery
Inheriting money from your parents
5
Saving is about
Contentment and emotion
Making more money and discipline
Pride and greed
Contentment and earning more money
6
The persistent rise in the cost of goods and services over time is called this.
compound inflation
inflation
interest
deflation
7
This system works for managing spending on things without a fixed monthly expense
the accounting system
the envelope system
the cross banking system
the zero-based budget
8
Car repairs are a:
Fixed expense
Discretionary expense
Variable expense
Intermittent expense
9
Doing a budget does NOT:
Make your money go further
Remove guilt and shame associated with a purchase
Show if you are overspending in an area
Make overspending more likely
10
The zero-based budget is the best method of budgeting because:
It requires less discipline
It is less complicated
It ensures every dollar you earn is given a specific purpose
It allows less money for wants
11
Why was the use of credit uncommon prior to 1917?
All of the answers are correct reasons
Lending money to others was not profitable
Borrowing money was not socially acceptable
Laws prevented charging high interest rates on credit.
12
Interest earned on interest previously earned is called this:
Simple interest
There is no such thing
Compound interest
Sliding interest
13
All of the following explain why emergency funds should be in a separate savings account except
So you don't confuse your spending and saving money
So it is clear which money is only for emergencies
So your emergency savings can earn a lot of interest
So it is not too easy to access
14
Which of the following is NOT a reason that people fail to save money:
They do not live on a budget
They lack discipline
They lack focus
They account for every dollar they spend
15
When it comes to personal finance, the challenge is managing your:
bank account
income
friends
behavior
16
Which of the following is a consequence of spending more than you make?
Stress
Missed opportunity to save and invest
All of the answers
A cycle of debt
17
Key components of financial planning include all of the following EXCEPT:
Allowing your financial planner to make all your decisions.
Replacing money myths with money truths.
Writing out a detailed plan to accomplish your goals.
Regularly monitoring and reassessing your financial plan.
18
Which of the following account records would have the most current balance?
Your own account register
A monthly bank statement
All of these records will be accurate to the minute
Account balance from the ATM
19
Eating out is a:
Emergency expense
Discretionary expense
Variable expense
Fixed expense
20
What does it mean to have a negative savings rate?
Having no savings at all
Saving for something that is a want instead of a need
having a fully funded emergency fund
Spending more money than you earn
21
Groceries are a:
Fixed expense
Discretionary expense
Variable expense
Intermittent expense
22
All of the decisions of a person/family regarding their money are known as this:
Financial literacy
Assets
Currency
Personal finance
23
During the Great Depression, policymakers convinced commercial banks that:
Consumer credit could be profitable
They would not be able to compete with loan sharks
Middle class consumers would not use credit
Consumer credit was not a profitable industry
24
Which of these is NOT a key to saving money?
Focus
Making saving a habit and a priority
Your income
Discipline
25
All of the following are benefits of understanding your money personality EXCEPT:
You can then develop a financial plan that works for you
It allows you to excuse excessive spending as your nature
It allows you to grow and learn
None of the above
26
Rent is a:
Fixed expense
Intermittent expense
Variable expense
Discretionary expense
27
A written budget, if followed, removes all of the following from your finances EXCEPT:
Guilt
Management by crisis
Discipline
Overspending
28
The widespread financial insecurity of Americans is primarily because:
Their incomes are too low
Their government is unable to help the disabled/unemployed
They save a high proportion of their income.
Their saving rates are low and many borrow to spend
29
Why is having an emergency fund so important?
To set money aside for large purchases; like vacations
None of the answers are correct
Its not if your have a good-paying job
It is for unexpected financial emergencies
30
Your monthly budget should include all of the following EXCEPT:
Discretionary expenses
Emergency expenses
Fixed expenses
Variable expenses
31
At your age, a fully funded emergency fund should be:
$1,000
$5,000
$100
$500
32
Which of the following best explains why students should learn about personal finance?
Personal finance skills are too complex to learn when young.
Trial and error are the best way to learn about finances.
It can eliminate costly financial mistakes.
Learning to manage money will help your career.
33
Which of the following is FALSE?
A budget is a written plan for saving and spending
A cash flow statement summarizes all income and expenses
A cash flow statement reflects what has already taken place
A budget summarizes spending and saving over a year
34
Which of the following is NOT a true statement?
Banks were willing to lend more as their profits increased.
The credit industry has not changed much since 1917.
Americans learned to borrow amidst post-WWII prosperity.
After 1970, consumer debt skyrocketed.
35
This principle suggests that money today has different buying power in the future.
opportunity cost
time value of money
deflation
interest rate
36
Why should interest earned NOT be a factor with your emergency fund?
It is not intended to grow wealth
Inflation can eat up the interest earned
It is only intended for large purchases in the future
Interest-bearing accounts always earn high rates of interest
37
For which of the following should you save?
purchases
wealth building
all of these answers are correct
emergency fund
38
Which of the following is NOT a record keeping feature of banks?
Customer service reconciles your account for you
An account register
A monthly account statement
A reconciliation sheet
39
Instead of borrowing money for large purchases, you should set money aside in a ___________ .
Credit card fund
Sinking fund
Emergency fund
Mortgage fund
40
Which of the following is something that a typical millionaire would do?
Spend less money than they earn
Replace things that are not broken
Lease a new car
Carry debt
41
All of the following are some financial mistakes that Americans often make EXCEPT:
Failing to plan for retirement
Not keeping a written monthly budget
Having an emergency fund
Using debt as a financial tool instead of saving
42
Which of the following is NOT one of the three basic reasons for saving money?
Building wealth
Large purchases
Emergency fund
Having money to to lend to friends
43
Which of the following steps is the First Foundation?
Build wealth and give
Pay cash for your car
Save a $500 emergency fund
Get out of debt
44
Which of the following is a consequence of overdrawing your checking account?
Overdraft fee from your bank
Bounced check fee from the store
All of these are consequences of overdrawing your account
Stress from money mismanagement
45
Which explains why income ALONE does not determine wealth?
Only people who are natural savers can become wealthy.
Investing is the only factor in wealth building.
Income alone DOES determine a person's wealth.
Income does not dictate spending and saving behavior.
46
As an adult, a fully funded emergency fund should be:
3-6 months of your income
1 year of your income
7-9 months of your income
1 month of your income
47
When it comes to managing money, success is about ___% knowledge and ___% behavior.
80, 20
50, 50
60, 40
20, 80
48
This is the percentage of Americans who live paycheck to paycheck:
25%
50%
70%
40%
49
Which of the following is NOT a factor in becoming money smart?
Learn how to read your credit card statements
Have knowledge of basic math
Learn the language of money
Manage your behavior with money
50
Using a sinking fund, how much do you have to save each month to buy a $4,800 car in a year?
400
500
275
300

Personal Finance Review 1 (Chapters 1-3) Flashcards | StudBud