Personal Finance Final Exam Study Guide
1. Why is it important to investigate a future career?
It is important to investigate your future career so you will know the steps you need to take in order to get there.
2. Why is it important to set goals?
It is important to set goals in order to give you the sense of urgency.
3. What is a smart goal?
Clearly stated, achievable in a specific time frame
4. When should you begin to plan for your future?
As soon as possible but certainly by the time you enter high school in order to insure you take the classes that will get you where you want to go.
5. What are three different ways that you can receive the training and/or education that you will need to be successful in a chosen career?
Academic, vocational, internship
6. What is a w-2
The form you receive at the end of January that you file with the IRS.
7. What is a W-4
The form you fill out the first day of work that asked you how many allowances (dependents) you will claim on your taxes. The more allowances you have the less your tax liability is, this can be a problem at the end of the year if you claim too many allowance you may owe money to the IRS.
8. What is a “deduction” on your w-4?
These are the allowances you claim or dependents.
9. When analyzing a paystub list the deductions you will see from your gross pay?
Federal
State
Social Security
Medicare
10. What is a 401K
An employee controlled retirement plan.
11. Why is a retirement plan important?
So you will be able to live after your paycheck stops.
12. What is social security?
A government sponsored plan to help people in need.
13. Who receives social security?
senior citizens
disabled
children and spouse survivor benefits
14. How can you find out what your social security payments will be?
Contact Social Security and ask for a statement
15. What is the difference between a checking and a savings account?
Checking accounts allow unlimited withdrawals.
16. What is the difference between a checking account VISA/MC privilege and a strictly credit card VISA/MC?
Checking account Visa MC take money directly from your checking account
17. What is the drawback of a bank card without a VISA /MC privileges?
It cannot be used as a Visa/MC
18. What does APR mean?
19. Why is it important to research credit cards before applying?
To find out what they charge for interest, how long the grace period is and how they figure out their interest.
20. What is the biggest problem with credit cards?
People abuse them.
21. Why do we need credit cards?
For times when you do not want the money taken directly from your account like hotels and car rentals.
22. What are the three credit rating companies commonly used?
experian,
23. How can you get a free credit report?
for free on line
24. What is the most important step in buying a car?
research
25. What is the invoice price?
the price the dealer pays
26. What should you expect to pay over the invoice price?
300-500
27. What additional fees are associated with buying a car?
dealer fees, tax, registration, insurance
28. How much will you pay in state tax?
6%
29. How much does it cost to register and license a new car?
$75.00
30. What 4 types of Insurance should everyone have?
Health, home/rent, life, car
31. What is a liability?
32. What is a deductible? This is the amount you are responsible for paying to repair your car, home.
33. How does whole life insurance differ from term insurance? Whole life is like a savings account that will pay you back when you are older.
34. Who pays for the damage on your vehicle if the person that hits you does not have insurance?
Your insurance company
35. Why is health insurance important if you are young and healthy?
Because if something happens it will bankrupt you.
36. What is “replacement value” mean?
This is what the item was worth at the time of the loss
37. Why is it important to do research before you make a large purchase?
So you know if you a getting a quality product at a good price.
38. Why is creating a budget important?
Creating a budget gives you the freedom to understand how much money you have and what you need to do with it.
39. What are fixed costs in your budget?
These are items that you must pay every month
40. What are flexible costs?
These are things that change every month.
41. What does the statement “pay yourself first” mean?
This means that you should always put the money you need for your future away first before any other purchases.
42. What are the advantages and disadvantages of renting vs buying a house
renting a house gives you less flexibility to change things you don't like but you are also not responsible for taxes, upkeep or other things owners are responsible for. If you own a home you have an asset that may increase in value.
43. What can you expect to pay in addition to rent on a monthly basis?
electricity
renters insurance
food
gas
entertainment
clothing
44. What are your responsibilities as a renter?
Keep apartment in good condition and leave it in the condition it was when you rented it.
45. How much of a deposit will you need to pay?
At least one month of rent
46. What are the advantages and disadvantages of owning a home?
Expensive up keep. Asset
47. What is a down payment?
The amount of money the bank requires you to have in cash in order to get a mortgage. Usually 20%
48. What is an appraisal?
A professional statement of your homes worth
49. How much do realtors get paid?
6% of the sale price
50. Who pays the realtor?
The seller
51. What is a house inspection?
A professional statement on the condition of the house and all major systems and appliances.
52. What are closing costs?
These are the costs you will have to pay when you exchange money and papers when you buy a house, Can be $3000-$5000
53. Who pays closing costs?
Can be share but usually the buyer
54. What is a mortgage?
Loan that uses the home as collateral
55. What are the current interest rates on mortgages?
3.65%
It is important to investigate your future career so you will know the steps you need to take in order to get there.
2. Why is it important to set goals?
It is important to set goals in order to give you the sense of urgency.
3. What is a smart goal?
Clearly stated, achievable in a specific time frame
4. When should you begin to plan for your future?
As soon as possible but certainly by the time you enter high school in order to insure you take the classes that will get you where you want to go.
5. What are three different ways that you can receive the training and/or education that you will need to be successful in a chosen career?
Academic, vocational, internship
6. What is a w-2
The form you receive at the end of January that you file with the IRS.
7. What is a W-4
The form you fill out the first day of work that asked you how many allowances (dependents) you will claim on your taxes. The more allowances you have the less your tax liability is, this can be a problem at the end of the year if you claim too many allowance you may owe money to the IRS.
8. What is a “deduction” on your w-4?
These are the allowances you claim or dependents.
9. When analyzing a paystub list the deductions you will see from your gross pay?
Federal
State
Social Security
Medicare
10. What is a 401K
An employee controlled retirement plan.
11. Why is a retirement plan important?
So you will be able to live after your paycheck stops.
12. What is social security?
A government sponsored plan to help people in need.
13. Who receives social security?
senior citizens
disabled
children and spouse survivor benefits
14. How can you find out what your social security payments will be?
Contact Social Security and ask for a statement
15. What is the difference between a checking and a savings account?
Checking accounts allow unlimited withdrawals.
16. What is the difference between a checking account VISA/MC privilege and a strictly credit card VISA/MC?
Checking account Visa MC take money directly from your checking account
17. What is the drawback of a bank card without a VISA /MC privileges?
It cannot be used as a Visa/MC
18. What does APR mean?
19. Why is it important to research credit cards before applying?
To find out what they charge for interest, how long the grace period is and how they figure out their interest.
20. What is the biggest problem with credit cards?
People abuse them.
21. Why do we need credit cards?
For times when you do not want the money taken directly from your account like hotels and car rentals.
22. What are the three credit rating companies commonly used?
experian,
23. How can you get a free credit report?
for free on line
24. What is the most important step in buying a car?
research
25. What is the invoice price?
the price the dealer pays
26. What should you expect to pay over the invoice price?
300-500
27. What additional fees are associated with buying a car?
dealer fees, tax, registration, insurance
28. How much will you pay in state tax?
6%
29. How much does it cost to register and license a new car?
$75.00
30. What 4 types of Insurance should everyone have?
Health, home/rent, life, car
31. What is a liability?
32. What is a deductible? This is the amount you are responsible for paying to repair your car, home.
33. How does whole life insurance differ from term insurance? Whole life is like a savings account that will pay you back when you are older.
34. Who pays for the damage on your vehicle if the person that hits you does not have insurance?
Your insurance company
35. Why is health insurance important if you are young and healthy?
Because if something happens it will bankrupt you.
36. What is “replacement value” mean?
This is what the item was worth at the time of the loss
37. Why is it important to do research before you make a large purchase?
So you know if you a getting a quality product at a good price.
38. Why is creating a budget important?
Creating a budget gives you the freedom to understand how much money you have and what you need to do with it.
39. What are fixed costs in your budget?
These are items that you must pay every month
40. What are flexible costs?
These are things that change every month.
41. What does the statement “pay yourself first” mean?
This means that you should always put the money you need for your future away first before any other purchases.
42. What are the advantages and disadvantages of renting vs buying a house
renting a house gives you less flexibility to change things you don't like but you are also not responsible for taxes, upkeep or other things owners are responsible for. If you own a home you have an asset that may increase in value.
43. What can you expect to pay in addition to rent on a monthly basis?
electricity
renters insurance
food
gas
entertainment
clothing
44. What are your responsibilities as a renter?
Keep apartment in good condition and leave it in the condition it was when you rented it.
45. How much of a deposit will you need to pay?
At least one month of rent
46. What are the advantages and disadvantages of owning a home?
Expensive up keep. Asset
47. What is a down payment?
The amount of money the bank requires you to have in cash in order to get a mortgage. Usually 20%
48. What is an appraisal?
A professional statement of your homes worth
49. How much do realtors get paid?
6% of the sale price
50. Who pays the realtor?
The seller
51. What is a house inspection?
A professional statement on the condition of the house and all major systems and appliances.
52. What are closing costs?
These are the costs you will have to pay when you exchange money and papers when you buy a house, Can be $3000-$5000
53. Who pays closing costs?
Can be share but usually the buyer
54. What is a mortgage?
Loan that uses the home as collateral
55. What are the current interest rates on mortgages?
3.65%
