#1
What is the primary purpose of creating a budget?
To limit spending
ExplanationBudgeting helps control expenses and allocate resources efficiently.
#2
Which of the following is NOT typically considered a component of a comprehensive financial plan?
Shopping spree
ExplanationA shopping spree is an expenditure rather than a component of financial planning.
#3
What is the purpose of unemployment insurance?
To provide financial assistance to those who lose their jobs
ExplanationUnemployment insurance offers financial support to individuals facing job loss.
#4
What is the purpose of a health savings account (HSA)?
To pay for healthcare expenses
ExplanationHSAs allow individuals to save for medical expenses with tax advantages.
#5
What is the purpose of emergency savings?
To cover unexpected expenses
ExplanationEmergency savings provide a financial buffer for unforeseen events.
#6
What does the term '401(k)' refer to?
A retirement savings plan
Explanation401(k) is a tax-advantaged retirement savings plan offered by employers.
#7
What is the purpose of diversification in investment?
To minimize risk
ExplanationDiversification spreads investment across different assets to reduce risk.
#8
Which of the following is NOT a characteristic of a Roth IRA?
Contributions are tax-deductible
ExplanationRoth IRA contributions are made with after-tax money.
#9
Which of the following is NOT a social safety net program in the United States?
Snapchat
ExplanationSnapchat is a social media platform, not a social safety net program.
#10
Which of the following is NOT a factor to consider when evaluating insurance needs?
Number of pets
ExplanationPet ownership doesn't directly influence one's insurance requirements.
#11
Which of the following is NOT a benefit of investing in real estate?
Guaranteed returns
ExplanationReal estate investment returns are subject to market fluctuations.
#12
Which of the following is NOT a type of insurance commonly used in financial planning?
Pet insurance
ExplanationPet insurance is not typically considered a core component of financial planning.