A
Fill in the blanks with the correct responses. If you follow the 50-30-20 rule of budgeting, you'll be putting 50% of your monthly income toward _______________, 30% of your monthly income toward _____________, and 20% of your monthly income toward ______________.
Needs, wants, savings
Why is diversification a recommended investment strategy
Diversifying your portfolio helps reduce risk
How is a bond different from a stock?
A bond is a loan you give to an organization while a stock is partial ownership in a company
All of the following are costs of going to college EXCEPT…
Scholarships and grants
Which of the following paycheck withholdings puts money into a retirement investment fund that you will manage?
401(k) contribution
What are the two most important factors in calculating your credit score?
Payment history and total debt
What strategy should you use to pay off multiple sources of debt if you want to pay the lowest amount of interest over time?
High rate method
Which of the following is a reason to use a savings account rather than a checking account?
Higher interest rates on deposits
What is a benefit of going to college and having a college degree?
Expanded professional and social network
What is the name of the tax form that requires you to provide identification and proves you are eligible to work in the U.S.?
I-9
How can your credit score impact your financial well-being?
Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be
The amount you can charge to a secured credit card is limited by…
The amount of money you deposit into an account as collateral
Why is it important for you to understand your risk tolerance before you start investing?
You should tailor your investment portfolio so that it assumes an amount of risk you are comfortable with
What do you need to file your FAFSA if you're a dependent?
Your and your parents' tax forms from 2 years prior
What is an insurance premium?
Your monthly payment to your insurer, regardless of whether you use any services
What is not a benefit of using a checking account?
Checking accounts act as a good savings vehicle
Which best describes the Debt Snowball method for paying off debt?
Make the monthly minimum payments on all your debts, and then put any extra cash toward the debt with the lowest balance
Which of the statements describes the relationship between risk and return when considering an investment?
Investors expect to earn a higher return when they invest in a high risk asset
When does the FAFSA filing period open every year?
October 1st
If a taxpayer fills out their W-4 in a way that does not withhold enough money to cover their tax obligation, what is the most likely outcome after they file their taxes?
They will owe a payment to the IRS
When signing up for a new checking account you answer "No" and opt out of overdraft coverage. On this day, you have $10 in your account and go out and use your debit card to buy lunch for $12, a movie ticket for $12 and dinner for $15. What is likely to be the outcome resulting from these transactions
Since you declined overdraft coverage, the bank will not allow you to overdraw your account so your debit card will be denied
How does investing in the stock market differ from putting money in a savings account at a bank?
Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies
Which is TRUE about the FAFSA?
There is no cost to file the FAFSA
Why is it important to be extremely careful when completing your 1040 form?
The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government
Your health insurance plan has a $20 copay for certain covered prescription medications. You arrive at the pharmacist and pick up your prescription (which is covered under your plan) which has a list price of $75. How much would you pay the pharmacy?
$20