Budgeting & Saving
According to the 50-30-20 rule, what do the 50%, 30%, and 20% represent?
50% needs, 30% wants, 20% savings
When you use a debit card at checkout, which account is immediately affected?
It is deducted directly from your checking account
True or false: A prepaid debit card is the same as a traditional debit card. Explain your answer
False — prepaid debit uses pre-loaded funds; traditional debit draws from linked bank account.
True or false: With financing you own the vehicle at the end of the term. Provide the correct answer.
True — Financing you make payments to buy the car; you own it when loan is paid (contrast to leasing)
If an item is 33% off an original $90 price, what is the sale price?
90(.67)=60.30
Give one effective automatic strategy to build savings from each paycheck
Example: Direct-deposit a set percentage (e.g., 10%) from each paycheck into savings automatically.
Explain what “direct deposit” is in one clear sentence.
Employer electronically sends your paycheck directly to your bank account.
Explain the primary difference between using a debit card and a credit card at point of sale.
Debit card spends your own money at point of sale; credit card borrows and creates a bill to pay later.
Which car cost is fixed regardless of miles driven: depreciation, insurance premium, fuel costs, or state registration fees? Explain.
State registration fees — typically fixed annual fees not tied to miles
A jacket is $120 after a 25% discount. What was the original price?
120 / 0.75 = $160
Which is the BEST time to start saving for retirement and why?
As soon as you start working (earliest possible)
Which of the following will reduce your checking account immediately: (A) mailing a rent check tomorrow, (B) using debit today, (C) using a credit card today, (D) depositing a check?
B (using debit today) — it immediately reduces checking balance
Duc has a $1,000 credit limit and an $800 balance. What is his available credit? Show the calculation.
Available credit = $1,000 − $800 = $200.
Write the exponential decay formula for a $45,000 car depreciating 20% per year.
y=45000(0.8)^x
A subtotal is $120.75. Apply a 5% tax, then subtract a $15 coupon, then apply 20% off the remaining amount. Calculate the final cost
Tax:
120.75 (1.05) = 126.79
Coupon:
126.79 − 15 = 111.79
Discount:
111.79(0.80) = $89.43
Define “living paycheck to paycheck” and name two ways to avoid it.
Means paychecks only just cover expenses with no savings; avoid by budgeting, building emergency fund, reducing nonessential spending.
What is the difference between a checking and a savings account?
Checking: frequent transactions, usually lower interest;
Savings: interest-bearing, transaction-limited.
Why do credit card companies prefer customers pay only the minimum each month rather than the full balance? Explain the incentive.
Because carrying a balance generates interest revenue for the company; minimum payments prolong balances and increase interest collected
A car depreciates 15% per year. Estimate the value of a $40,000 car after two years. (Show equation and final answer)
y=40000(0.85)^2=28900
A bulk 50-lb bag of rice costs $42.50; the same rice costs $1.20 per lb otherwise. How much do you save by buying the bulk bag?
Regular cost for 50 lb = 50(1.20) = $60.00.
Bulk cost = $42.50.
Savings = $60.00 − $42.50 = $17.50.
You plan to save for three goals: a laptop in 6 months, a car in 3 years, and retirement. Categorize these as short-, medium-, or long-term and recommend a savings vehicle for each.
Laptop = short-term (6 months) → high-yield savings; Car = medium-term (3 years) → CD or conservative short-term investment; Retirement = long-term → tax-advantaged retirement account (e.g., 401(k), IRA).
A bank customer deposits $1,200 in checking and $3,000 in savings. Explain where banks get money to lend and why banks pay interest on savings
Banks lend from deposits customers place in checking/savings; they pay interest to savers as an incentive to keep deposits which fund loans.
Explain why paying more than the monthly amount due on an amortized loan reduces total interest paid. Include the terms "principal" and "interest" in your answer.
Extra payments reduce principal faster; since interest is charged on remaining principal, lowering principal reduces future interest
A car is worth $14,700 after depreciating 7% per year for 3 years. Find the original value and show work.
14700=a(0.93)^3
a= 14700/((.93)^3)
a=18275
A store buys a dress for $45 and sells it for $72. Calculate the markup amount and the markup percent based on cost
Markup amount = 72 − 45 = $27
Markup percent = 27 / 45 = 0.60 = 60%