Chapter 1 Lesson 4 The Road to Financial Success

What is the correct formula to calculate your net worth?

• Assets plus liabilities
• Assets times liabilities
• Liabilities minus assets
• Assets minus liabilities

If your assets total $50,000 and your liabilities are $30,000, what is your net worth?

• $80,000
• $50,000
• $30,000
• $20,000

What does a positive net worth indicate?

• You have no debts.
• Your assets are greater than your liabilities.
• Your assets are equal to your liabilities.
• Your liabilities are greater than your assets.

How can understanding your net income help you achieve your financial goals?

• It allows you to ignore your expenses.
• It only matters if you have a job.
• It has no impact on your financial planning.
• It helps you budget and plan for savings.

Why is it important to set specific financial goals?

• To ensure you have a vague idea of your finances
• To avoid tracking your expenses
• To increase the chances of achieving your financial objectives
• To make budgeting more difficult

If you want to save for a vacation in two years, what type of financial goal is this?

• Immediate goal
• Long-term goal
• Medium-term goal
• Short-term goal

What is the difference between short-term and long-term financial goals?

• Short-term goals are less important than long-term goals.
• Short-term goals are for immediate needs, while long-term goals are for retirement only.
• Short-term goals take up to two years, while long-term goals take longer than five years.
• Short-term goals take longer than five years, while long-term goals take up to two years.

Which of the following is NOT a component of a financial plan?

• Setting financial goals
• Budgeting
• Tracking expenses
• Ignoring debts

What is a financial plan often compared to?

• A list of expenses
• A collection of assets
• A map for navigating finances
• A recipe for cooking

Reflecting on your financial goals, which of the following steps is most crucial for achieving them?

• Avoiding any financial tracking
• Creating a detailed financial plan
• Setting vague goals
• Ignoring your expenses