Sample Deck Flashcards
What is financial literacy?
The ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.
True or False: Financial literacy only involves understanding how to invest.
False
Fill in the blank: A ________ is a plan for managing income and expenses.
budget
What is the importance of budgeting?
Budgeting helps individuals track their income and expenses, ensuring they live within their means and save for future goals.
Which of the following is NOT a component of financial literacy? A) Saving B) Investing C) Ignoring debt
C) Ignoring debt
What does ‘compounding interest’ refer to?
The process where the interest earned on an investment is reinvested to generate additional interest.
True or False: A credit score is a measure of your creditworthiness.
True
What is the purpose of an emergency fund?
To provide financial security by covering unexpected expenses or emergencies.
Multiple Choice: Which of the following is a good practice for managing debt? A) Accumulating more debt B) Making minimum payments C) Paying off high-interest debt first
C) Paying off high-interest debt first
What is the difference between a savings account and a checking account?
A savings account earns interest and is used for saving money, while a checking account is used for everyday transactions.
Fill in the blank: A ________ is a legal document that outlines the terms of a loan.
contract
True or False: Investing always guarantees a profit.
False
What is diversification in investment?
The practice of spreading investments across various financial assets to reduce risk.
Multiple Choice: Which of the following is an example of a fixed expense? A) Rent B) Groceries C) Entertainment
A) Rent
What is the role of a financial advisor?
To provide guidance on financial planning, investments, and wealth management.
