Financial Skills for Smart Living Flashcards
____ is the material basis of well-being, which is reflected in a person’s consumption level.
Standard of living.
Getting plenty of rest, your relationships with friends/family and your freedom are all examples of:
A person’s well-being.
The percentage of income that is spent not saved is known as:
The average propensity to consume.
What best describes what it means to live by “living paycheck to paycheck”?
The average propensity to consume.
The “R” in SMART Goals means?
Realistic.
The SMART GOALS is an acronym for setting quality goals. The “S” stands for:
Specific.
What is an example of a “real asset”?
A House.
If you want to buy a vehicle and take $9,000 from your savings account and purchase a $30,000 vehicle (financing the difference), how will your assets on your net worth statement change?
My assets on my net worth statement would increase by $21,000.
If your net worth is $50,000 and you pay off your student loan from your savings account, how will your net worth statement be affected?
Your assets and liabilities will go down. Your net worth would not change.
What would an Income and Expense statement do?
Track inflows and outflows over a past period of time.
Which financial statement looks at a past period of time and shows money coming in and coming out?
Income and Expense statement.
What is not an example of Unearned Income?
Bonuses.
Joe made $50,000 last year. He paid off $2,000 in credit card debt. He put $4,000 in his 401K retirement plan, his employer put in a 50% match on his contributions, he also saved $2,000 to his Roth IRA. What is Joe’s savings ratio?
16.00%.
Sarah’s monthly gross income is $4,000 and her monthly net income is $3,327. She pays $650 in rent and has a car payment of $447. What is her consumer debt service ratio?
13%.
The consumer debt service ratio is solved by taking ____ and should ideally be under ____%.
Total monthly consumer loan payments (not including mortgage) divided by net monthly income, 20%.
The most common format for a resume is:
Chronological.
What order should your work experience be listed?
Reverse chronological order (newest to oldest).
The purpose of a cover letter is to:
Persuade.
What are appropriate actions to take AFTER an interview?
Send a “thank-you” email or note to the people who interviewed you.
When interviewing it is important to “do your research.” What question might you be asked in the interview that would fall into this category?
What do you know about the position you applied for?
All employers provide mandatory benefits to its employees. What is not a mandatory benefit?
Child care.
Juan received two job offers – one in Kansas City for $45,000 with 50% of health insurance paid by the company and the other in San Diego, CA for $55,000 with full health insurance paid by the company. What is TRUE?
The Kansas City offer is better because the cost of living is lower and he will receive %50 health insurance paid by the company.
What item would not be a factor in the cost of living?
Technology.
Most state taxes are deducted from paychecks to help pay for health and:
Education.
If John has an individual account for $200,000 at bank ABC and $400,000 in another individual account at a different bank (bank XYZ), how much is covered under FDIC protection?
$450,000.
How much should you save for your emergency fund?
I should save 3-6 months of living expenses.
What savings product is the least liquid?
Certificate of Deposit (CD).
You should always pay yourself ____?
First.
If you have $2,000 and make %10 compound interest, how much would you have after 2 years?
$2,420.
If you have a stable employment with a fixed salary and excellent insurance coverage, you should likely have ____ of fixed expenses saved in your emergency fund.
3 months.
Faith was trying to categorize her different types of credit and was unsure what would be classified as revolving credit. You could tell her that a ____ is revolving credit.
Credit card.
What types of credit would be considered “open-ended” or “revolving”?
Retail credit card.
Given an amortized loan of $10,000 with an interest rate of 4.00%, what would happen if your payment schedule was 10 years instead of 5 years?
Your payments would be lower, you would pay more interest over the life of the loan.
It is recommended that your monthly loan payments (not including your home mortgage) should not be over what percentage of your net monthly income?
20%.
Which of the following loans typically has extremely high interest and is a short term loan?
Payday loan.
Which type of loan has principal payments “built-in” so at the end of the loan term there is nothing further owed?
Amortized loan.
How long does Chapter 7 bankruptcy stay on your credit score?
10 years.
What has the largest impact on your credit score?
Payment history.
Calculating depreciation: if you buy a new car for $40,000 and it depreciates 25% the first year and 17.5% the second year, what is your car worth at the end of the second year?
$24,750.
Fuel cost: if you drive 600 miles per month, your car gets 24 miles per gallon (MPG), and fuel costs $2.80 per gallon; how much will you spend PER YEAR on fuel?
$840.
You can calculate the cost of fuel per month based on three factors. What is not one of those factors?
Size of the gas tank.
Repairs and upkeep on a home can usually range from ____ per year in costs.
1% - 3%.
If Jill’s income is $7,000/mo. and she currently has $900/mo. in other debt payments, how much monthly payment towards a home loan would the bank likely be willing to issue as a mortgage for a home purchase?
$1,620.
What type of mortgage might a former military member use to receive a low interest rate and minimal down payment requirement?
VA mortgage.
What type of mortgage might a senior use to help supplement retirement income and stay in their home?
Reverse mortgage.
