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Financial Literacy Flashcards | StudBud
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Financial Literacy
Financial Literacy
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Flashcards
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Questions
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Answers
1
What’s the retirement plan that you get through your employer called?
Roth IRA
401(k)
Social Security
Traditional IRA
2
How many months should an emergency fund cover?
3 to 6 months
7 to 12 months
1 to 2 months
3
What does APR stand for in relation to loans and credit cards?
Automatic Payment Rule
A. Annual Percentage Rate
Annual Payment Ratio
Adjustable Pay Rate
4
Why should you think twice before agreeing to cosign a loan?
You are responsible for 25% of the loan payment
You are responsible for half of the total loan payment
You are responsible for the down payment on the loan
You are responsible for the entire loan payment
5
What is the purpose of a budget?
To track income and expenses
To increase your spending power
To eliminate all unnecessary purchases
To avoid paying taxes
6
Which of the following is a fixed expense?
Clothing
Entertainment
Groceries
Rent/Mortgage
7
Paying only the minimum amount on your credit card bill each month helps you avoid interest.
False
True
8
Your credit score is important because:
It can impact on whether you can finance major purchases
All of the above
It can determine whether you can get credit cards
It can affect your interest rate if you finance a car or home
9
Which type of tax is automatically deducted from your paycheck?
Property tax
Sales tax
Excise tax
Income tax
10
What does a credit score measure?
Your income level
Your spending habits
Your ability to repay debt
Your tax payments
11
A higher APY means you will
earn
more interest
False
True
12
What age range is considered to be the best time to teach people about financial literacy?
10-15
21-25
16-20
13
How much money do you need for a down payment on a traditional mortgage?
At least 20% of the purchase price
5% of the amortization on the loan
One year’s salary
At least $20,000
14
A lower interest rate on a mortgage always means you'll pay less over the life of the loan
False
True
15
What form do employees receive from their employer to report annual wages for taxes?
Form 1040
W-4
W-2
Form 1099
16
Which of the following answers provide an example of how to reduce your expenses?
Buying stuff that you don’t use
Going to Starbucks
Instead of going out cook your own food
Count your daily/weekly expenses
17
How much of your income should you save each month?
20%
30%
10%
5%
18
Which of the following has historically had the highest rate of return over long periods of time?
Stocks
Bank savings accounts
Bonds
19
What is the price paid to use money or credit, and is expressed as a percentage of the amount borrowed?
Mortgage
Interest Rate
Loan
20
What is the main benefit of a Roth IRA over a traditional IRA?
Roth IRAs have higher interest rates
Withdrawals in retirement are tax-free
Roth IRAs are only for high income earners
Contributions are tax-deductible
21
The higher your credit score, the lower your interest rate on a loan is likely to be?
True
False
22
Which of these can reduce your taxable income?
Lottery winnings
Credit card rewards
Student loan interest payments
Mortgage payments
23
Which does not affect your credit score?
Your income
Number of credit inquiries
Credit utilization
Payment history
