Personal Finance Knowledge Flashcard

Front

What is the primary purpose of creating a budget?

Back

To plan for future financial goals

Front

Which of the following is a component of a credit score?
Age of the account holder,
Payment history,
Number of dependents,
Type of employment

Back

Payment history

Front

Identify the type of investment that typically offers the highest potential return.

Back

Stocks

Front

What is the benefit of starting to save for retirement early?

Back

More time for compound interest to grow

Front

Which strategy is most effective for managing debt? Options: Ignoring bills until they are due, Paying only the minimum balance, Consolidating debts at a lower interest rate, Taking out new loans to pay old ones

Back

Consolidating debts at a lower interest rate

Front

Calculate the monthly savings needed to reach a financial goal of $12,000 in 5 years, assuming no interest is earned.

Back

$200

Front

Which of the following is a fixed expense in a typical budget? Groceries, Rent, Entertainment, Clothing

Back

Rent

Front

Explain how a high credit score can benefit an individual financially.

Back

It can result in lower interest rates on loans.

Front

Which type of investment is considered the safest? Options: Stocks, Mutual funds, Real estate, Government bonds

Back

Government bonds

Front

What is the primary advantage of a 401(k) retirement plan?

Back

Employer matching contributions