#1
What is the recommended percentage of your income to save for emergencies?
15%
ExplanationSave 15% of your income for emergencies.
#2
Which of the following is a type of consumer debt?
Mortgage
ExplanationMortgage is a type of consumer debt.
#3
Which of the following is an example of a fixed expense?
Rent or mortgage payment
ExplanationRent or mortgage payment is a fixed expense.
#4
What is the purpose of a 401(k) retirement account?
To save for retirement
Explanation401(k) is for retirement savings.
#5
What is the debt snowball method primarily focused on?
Paying off small debts first
ExplanationDebt snowball: focus on paying small debts first.
#6
What is the 'minimum payment' on a credit card statement?
The smallest amount you can pay to avoid late fees
ExplanationMinimum payment: smallest amount to avoid late fees.
#7
What is the purpose of a financial emergency fund?
To cover unexpected expenses
ExplanationEmergency fund covers unexpected expenses.
#8
What does APR stand for in relation to loans?
Annual Percentage Rate
ExplanationAPR stands for Annual Percentage Rate in loans.
#9
What is the 'snowball method' in the context of paying off debt?
Paying off the smallest debt first and then applying those payments to the next smallest debt
ExplanationPay off smallest debt first, then apply payments to next smallest.
#10
What is the debt-to-income ratio used for in personal finance?
To measure how much debt you have relative to your income
ExplanationDebt-to-income ratio measures debt relative to income.
#11
What is the purpose of a credit score?
To assess your borrowing risk
ExplanationCredit score assesses borrowing risk.
#12
What is the grace period on a credit card?
The period after the due date during which you can still make a payment without penalty
ExplanationGrace period is after due date, payment without penalty.
#13
What is the concept of 'paying yourself first' in personal finance?
Allocating a portion of your income for savings before paying bills or expenses
ExplanationPaying yourself first: save before expenses.
#14
What is the 'debt avalanche' method of paying off debt?
Paying off the debt with the highest interest rate first
ExplanationDebt avalanche: pay highest interest debt first.
#15
Which of the following is a potential disadvantage of using a debit card?
Risk of overspending
ExplanationUsing debit card poses risk of overspending.
#16
Which of the following factors does NOT typically affect your credit score?
Income level
ExplanationIncome level typically does not affect credit score.