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WISE: Money Management

One of the benefits of holding an investment for over a year rather than selling it in less than a year is that the
capital gains on the investment will be taxed at a lower rate
A man budgeted $200 a month for clothing. This month the man spent $150 on clothing therefore that budget item is considered to have
a budget variance
A person’s debt ratio shows the relationship between debt and net worth. The lower the ratio the
better off financially the person is.
A person complains about how expensive it is to be a cigarette smoker. One of the reasons cigarettes are so expensive is that
the government imposes an excise tax on them.
Spreading one’s assets across several types of saving and investment products to manage risk is called:
Diversification
Expenditures that remain constant from one time period to another are:
Fixed expenses
Jane saw a breakfast cereal being advertised on TV and insisted that her mother purchase this cereal. This is an example of advertising’s:
power of persuasion in creating demand
In terms of retirement income, a person should realize that the amount of money the person will receive from the Social Security System?s benefits depends on the person?s
earnings over a lifetime of work.
In addition to monthly mortgage payments, each year a homeowner can expect to pay
property taxes
A good example of a well-stated financial goal is:
Pay off $5,000 in credit card debt in two years
The term that best describes money left over after paying taxes, fixed and other essential living expenses, is:
Disposable income
John’s company will match his pre-tax contributions to the company’s retirement plan, known as:
A 401(k)
A stock broker or financial consultant:
Gives financial advice to clients
What does a well designed, successful financial plan include?
Retirement planning
I find myself using my credit card to cover the cost of food or rent because I’m regularly short on cash at the end of each month. The best thing to do is:
Make a budget and consider ways to reduce expenses or increase income.
Another term for the dollar amount of your paycheck after taxes and other withholdings is:
Net income
Financial plans need to:
be changed during different stages in life
In terms of their finances, when a couple has a baby, they will
receive an additional tax exemption because of the baby.
Financial planning is important because it helps you to:
reach financial goals and protect your assets
An important consideration when saving money for emergencies is:
high degree of safety and liquidity
Discretionary income is:
The difference between your total income and your essential living expenses
Which of the following careers would be a possible choice for someone interested in money and finance?
Banker
Financial planning helps individuals to:
have strategies for saving and investing
Goals
Need to be realistic, have a target date, and, if possible, an associated cost
Which of the following will help you the least in managing your money?
get advice from your friends
Which of the following is necessary for successful budgeting?
The ability to adjust spending to money available
In creating her budget, Ann realizes that her expenses exceed her income. Ann should immediately try to:
reduce or eliminate some expenses
When deciding between two job offers with a similar salary offer, a person should first consider:
Retirement and health plans
You want to gain control over your income and spending so that you will be able to save money. Which step will help you the most?
developing a budget
Our values are:
the basic principles that guide our actions and beliefs
A well stated financial goal is:
Realistic with a target date
Rossi has a part time job delivering pizzas to raise money for college in two years. Going to college is one of Rossi’s:
Goals
You can set up an Individual Retirement Account at:
A bank
Electricity and food expenditures are:
variable expenses that change from one period to another
An example of a fixed expense is:
Apartment rent
Can Cathy withdraw money from her IRA savings account?
There is a 10% penalty on any money she takes out before age 59
A clear understanding of our personal values will:
enable us to make choices that reflect what is important to us
The following is usually considered a variable expense:
electric bill payment
Something you are working to achieve within a defined period of time is a(an):
Goal
Money set aside to grow is typically called:
savings or investments
A term that best describes your gross pay after taxes are deducted is:
take-home pay
Julian is a single and recent college graduate who just got his first full-time job. Which of the following should be his first financial goal?
establishing a fund for emergencies

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