Earning Income
When a potential employer is telling you about their compensation package, they refer to…
The salary, plus any insurance, retirement, or other benefits they offer
For a young adult living on their own, which of the following would be considered a fixed expense in their budget?
Rent Payment
If you put $100 into a savings account with a 2% interest rate compounding monthly and don’t add or withdraw any additional funds, how much would you expect to have in the account a year later?
A little more than $102
If an investor wants to minimize their risk, a common strategy is to…
Diversify across asset classes
Mason receives a financial aid offer from his first choice college, and it includes each of the following types of aid. Which represents the best option, that he should accept first?
$4,000 grant
Keisha is trying to determine whether her desired career has future earnings potential. She should look at each of the following EXCEPT…
What the top 1% in her field earn annually
Matt has his first full-time job after graduation, and he wants to use a zero-based budget as part of his financial plan. What should he do?
Budget carefully so that all income is assigned a role to be spend, saved, or invested, so there’s zero money left unaccounted for.
Marti and Kat both want to save money for retirement in 40 years, and they each save $200 per month. Kat puts her money into a Roth IRA investment account holding a diversified stock mutual fund and Marti puts her money into a savings account compounding quarterly. Which statement is most accurate?
Kat’s strategy is riskier but will possibly lead to more money at retirement.
What are the two ways you can earn money by investing in a stock?
Choose stocks that pay dividends, and sell at a higher price than what you bought at.
Yasmin wants to use her credit card to build credit, but she wants to minimize the amount of interest she has to pay. Which strategy is best to meet her goal?
Pay her full bill on time, every month
Lin works part-time after school at a grocery store. When he looks at his pay stub, he sees his net income is lower than his gross income. Why?
Net income has taxes removed, while gross income is the total amount he earned.
In which scenario would it be most useful to do some online comparison shopping?
Choosing luggage to take on a semester abroad trip
Sammi uses the saving strategy of “pay yourself first.” What does that mean?
She puts money from each paycheck into her savings before she starts spending
Which of the following statements is true about investments in a diversified stock index fund such as the S&P 500?
It has average long-term return of 7-8%, but it is volatile and has some years with negative returns.
Omari is taking out an auto loan for a car that costs $12,000. Which of the following actions will help reduce the total amount he ends up paying?
Make a large down payment
Which IRS form do most Americans complete in order to file their annual taxes?
1040
The main purpose of a budget is…
To allow you to achieve your short-and long-term financial goals.
Two important features to look for when opening your first savings account are the bank being FDIC insured and…
Having low or no fees
Trent wants to start investing and decides to use an investing app because it’s so user-friendly and he’s always got his phone with him. What should Trent be cautious about to avoid bad investment decisions?
Getting frequent alerts may encourage him to sell when stock prices fall.
Each of the following factors will impact your credit score EXCEPT…
The brand of credit card you have
At the federal level, people pay taxes…
According to tax brackets based on income
Which of the following is an example of a cognitive bias leading to increased spending?
Seeing influencers on social media and feeling you must buy the same products to be happy.
Explain how an increased rate of saving can reduce the amount of money you pay in taxes.
Some retirement health and education savings accounts reduce your taxable income.
Sheryl is trying to put together an investment plan to use for the next 5-10 years. Each of these might be a part of that plan EXCEPT…
A secured credit card
Five years after college graduation, Carl finds himself with $36,000 of debt. When he gets a tax refund of $1,500, which debt should he apply the money to?
His credit card with an interest rate of 19.99%