Chapter One

Question 1

Personal Finance:

Answer 1

all the financial decisions an individual or family must make in order to earn, budget, save, spend, and give money over time

Question 2

Consumer:

Answer 2

a person or organization that uses a product or service

Question 3

Debt:

Answer 3

money owed to another person or company

Question 4

Paycheck to Paycheck:

Answer 4

an expression used to describe a person or household whose monthly income is devoted to expenses and has little to no savings

Question 5

Personal finance is only ___ head knowledge and ___ behavior

Answer 5

20%, 80%

Question 6

Almost ___ of Americans use all of the money they get from one paycheck just to make it to the next.

Answer 6

80%

Question 7

Once you understand how _____, _____, _____, ______, and _____ affect your money, you’ll have all the tools you need to make the right choices.

Answer 7

earning, budgeting, saving, spending, and giving

Question 8

In America, 72% of people say they‘re burdened by consumer debt. The average borrower has over $_______ of debt—not including a mortgage!

Answer 8

34,000

Question 9

Credit:

Answer 9

the granting of a loan and the creation of debt; any form of deferred payment

Question 10

Interest Rate:

Answer 10

the percentage of principal charged by the lender for use of its money​​​​​​​

Question 11

Loan Shark:

Answer 11

person or entity that charges borrowers interest rates above an established legal rate​​​​​​​

Question 12

Interest:

Answer 12

the additional cost a lender charges for borrowing their money

Question 13

__% of American adults have at least one credit card

Answer 13

83

Question 14

Prior to 1920, the only way for banks to make money by loaning money was to charge sky-high interest rates. But that was illegal, so most banks stayed out of the credit business. T/F

Answer 14

T

Question 15

Before World War 1 the average person could get credit without turning to loan sharks, so buying on credit became more socially accepted T/F

Answer 15

F, after

Question 16

the national student loan debt has ballooned to over $________

Answer 16

1.5 Trillion

Question 17

Financial Plan:

Answer 17

a plan of action that allows a person to meet not only their immediate needs but also their long-term goals

Question 18

Net Worth:

Answer 18

the amount by which the value of a person’s assets exceeds or falls behind the value of their liabilities

Question 19

Asset:

Answer 19

anything that is owned by an individual, including money in the bank or investments

Question 20

Liability:

Answer 20

financial debts or obligations

Question 21

Positive Net Worth:

Answer 21

the dollar value of a person’s assets is greater than the dollar value of their liabilities

Question 22

Negative Net Worth:

Answer 22

the dollar value of a person’s liabilities is larger than the value of their assets

Question 23

Net Income:

Answer 23

what a person earns after payroll taxes and other deductions are taken out; often referred to as take-home pay

Question 24

Expense:

Answer 24

the cost of goods or services; money paid out

Question 25

To calculate your net worth

Answer 25

simply subtract what you owe (liabilities) from what you own (assets).

Question 26

Calculate your net income

Answer 26

That’s the money you bring home after taxes are taken out. This includes all sources of income and ways you get money.

Question 27

Financial Literacy:

Answer 27

the knowledge and skill base necessary for people to be informed consumers and manage their finances effectively

Question 28

The five foundations:

Answer 28

1. Have a $500 emergency fund, 2. Stay out of debt, 3. Pay cash for your car, 4. Pay cash for College, 5. Be outrageously generous