Financial Skills for Smart Living

Question 1

____ is the material basis of well-being, which is reflected in a person’s consumption level.

Answer 1

Standard of living.

Question 2

Getting plenty of rest, your relationships with friends/family and your freedom are all examples of:

Answer 2

A person’s well-being.

Question 3

The percentage of income that is spent not saved is known as:

Answer 3

The average propensity to consume.

Question 4

What best describes what it means to live by “living paycheck to paycheck”?

Answer 4

The average propensity to consume.

Question 5

The “R” in SMART Goals means?

Answer 5

Realistic.

Question 6

The SMART GOALS is an acronym for setting quality goals. The “S” stands for:

Answer 6

Specific.

Question 7

What is an example of a “real asset”?

Answer 7

A House.

Question 8

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?

Answer 8

My assets on my net worth statement would increase by $21,000.

Question 9

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?

Answer 9

Your assets and liabilities will go down. Your net worth would not change.

Question 10

What would an Income and Expense statement do?

Answer 10

Track inflows and outflows over a past period of time.

Question 11

Which financial statement looks at a past period of time and shows money coming in and coming out?

Answer 11

Income and Expense statement.

Question 12

What is not an example of Unearned Income?

Answer 12

Bonuses.

Question 13

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?

Answer 13

16.00%.

Question 14

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?

Answer 14

13%.

Question 15

The consumer debt service ratio is solved by taking ____ and should ideally be under ____%.

Answer 15

Total monthly consumer loan payments (not including mortgage) divided by net monthly income, 20%.

Question 16

The most common format for a resume is:

Answer 16

Chronological.

Question 17

What order should your work experience be listed?

Answer 17

Reverse chronological order (newest to oldest).

Question 18

The purpose of a cover letter is to:

Answer 18

Persuade.

Question 19

What are appropriate actions to take AFTER an interview?

Answer 19

Send a “thank-you” email or note to the people who interviewed you.

Question 20

When interviewing it is important to “do your research.” What question might you be asked in the interview that would fall into this category?

Answer 20

What do you know about the position you applied for?

Question 21

All employers provide mandatory benefits to its employees. What is not a mandatory benefit?

Answer 21

Child care.

Question 22

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?

Answer 22

The Kansas City offer is better because the cost of living is lower and he will receive %50 health insurance paid by the company.

Question 23

What item would not be a factor in the cost of living?

Answer 23

Technology.

Question 24

Most state taxes are deducted from paychecks to help pay for health and:

Answer 24

Education.

Question 25

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?

Answer 25

$450,000.

Question 26

How much should you save for your emergency fund?

Answer 26

I should save 3-6 months of living expenses.

Question 27

What savings product is the least liquid?

Answer 27

Certificate of Deposit (CD).

Question 28

You should always pay yourself ____?

Answer 28

First.

Question 29

If you have $2,000 and make %10 compound interest, how much would you have after 2 years?

Answer 29

$2,420.

Question 30

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.

Answer 30

3 months.

Question 31

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.

Answer 31

Credit card.

Question 32

What types of credit would be considered “open-ended” or “revolving”?

Answer 32

Retail credit card.

Question 33

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?

Answer 33

Your payments would be lower, you would pay more interest over the life of the loan.

Question 34

It is recommended that your monthly loan payments (not including your home mortgage) should not be over what percentage of your net monthly income?

Answer 34

20%.

Question 35

Which of the following loans typically has extremely high interest and is a short term loan?

Answer 35

Payday loan.

Question 36

Which type of loan has principal payments “built-in” so at the end of the loan term there is nothing further owed?

Answer 36

Amortized loan.

Question 37

How long does Chapter 7 bankruptcy stay on your credit score?

Answer 37

10 years.

Question 38

What has the largest impact on your credit score?

Answer 38

Payment history.

Question 39

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?

Answer 39

$24,750.

Question 40

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?

Answer 40

$840.

Question 41

You can calculate the cost of fuel per month based on three factors. What is not one of those factors?

Answer 41

Size of the gas tank.

Question 42

Repairs and upkeep on a home can usually range from ____ per year in costs.

Answer 42

1% - 3%.

Question 43

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?

Answer 43

$1,620.

Question 44

What type of mortgage might a former military member use to receive a low interest rate and minimal down payment requirement?

Answer 44

VA mortgage.

Question 45

What type of mortgage might a senior use to help supplement retirement income and stay in their home?

Answer 45

Reverse mortgage.