Personal Finance Quiz #2

Question 1

How do you calculate opportunity cost?

Answer 1

1. Find total expenses
2. Find L.I. (lost income)
3. Add exp. & L.I.

Question 2

Calculate percent increase

Answer 2

1 + % (% as decimal)

Question 3

Calculate percent decrease

Answer 3

1 - % (% as decimal)

Question 4

Calculate a unit rate

Answer 4

$/unit

Question 5

List the 3 steps of creating a budget.

Answer 5

1. Create a personal cashflow statement
2. Turn cashflow statement into budget.
3. Improve budget

Question 6

Budget

Answer 6

Forecasts of future cash inflows and outflows.

Question 7

Opportunity Cost

Answer 7

Total amount of money that a decision costs you.

Question 8

Cost of Living

Answer 8

The amount of money an individual needs to maintain their standard of living.

Question 9

CLI

Answer 9

Cost of Living Index (the score that we give to the cost of living)

Question 10

What is the national average CLI?

Answer 10

100
Below 100 = cheap
Above 100 = expensive

Question 11

Dave Ramsey’s 7 Baby Steps to Saving

Answer 11

1. Save $1,000 in an emergency fund
2. Pay off all debt using the “debt snowball” method
3. Build up 3-6 months of expenses in savings (emergencies)
4. Invest 15% of income towards retirement
5. Save for your children’s college fund
6. Pay off home early
7. Build wealth and give