What is the purpose of an emergency fund?

To help one prepare themself for future financial problems

Accessing one's checking account, similar to a debit card, Paying for every-day goods like groceries or gas

What is the purpose of a budget?

To determine where one's money is going, To prevent overspending

The best way to avoid credit card debt is to...

Pay your credit card payments on time if you have a credit card, Don't get a credit card

What are credit cards used for?

Paying for goods in the immediate future so that you can pay later

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Financial Literacy

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Questions 16

Answers

1
The goal of saving money is to be able to afford weekly purchases
False
True
2
A checking account:
Yields high interest
Are used for every-day transactions
Requires a credit score of at least 600 to open
Can only be used to store money short term
3
A savings account:
Yields even lower interest than a checking account
Deposits money to a bank, which the bank then uses to invest in fields
Can only be opened by an individual with a high credit score
Must have a balance above $6,000 to get any loan above $15,000
4
You should always invest all your savings in one stock because:
It will increase your capital gains tax
When the stock grows, your savings will skyrocket
You should not do this
5
A credit score...
Tells financial institutions how likely one is to repay debts
Is a number assigned to one at birth which helps identify them
Is a number between 1 and 10 that tells banks how likely you are to fail
Tells financial institutions what your checking account's balance is
6
What is the purpose of an emergency fund?
To increase one's household breadbasket during times of economic distress
To eliminate redundancy in budgeting
To prevent underspending
To help one prepare themself for future financial problems
7
A check is used for:
Accessing one's checking account, similar to a debit card
Paying for every-day goods like groceries or gas
Receiving information about the contents of one's bank account(s)
8
A high credit score is bad
False
True
9
What is the purpose of a budget?
To determine where one's money is going
To know what one can spend more than feasible one
To prevent overspending
To waste time
10
The best way to avoid credit card debt is to...
Pay your credit card payments on time if you have a credit card
Purchase credit card insurance from AT&T
Use auto loans instead
Don't get a credit card
11
What are credit cards used for?
Eliminating the need for a savings account
Depositing paychecks into
To channel one's Roth IRA benefits into
Paying for goods in the immediate future so that you can pay later
12
You should only ever get a loan if you need to
True
False
13
What does APR stand for in loans and interest?
Annual Percentage Rate
Activation PIN Recollection
Annual Priority Rating
Altruism Priority Rating
14
You should avoid insurance at all costs
True
False
15
You should generally wait 3-4 months before repaying credit card debt, so that you can build your credit score
False
True
16
Which of the following is considered a fixed expense:
Transportation maintenance
Groceries
Utilities
Insurance

Financial Literacy Flashcards | StudBud