Foundations in Personal Finance, Chapter 1

Why should students learn about personal finance? Learning to manage money at this stage can eliminate financial mistakes and promote huge financial benefits for the future.
What are key components of financial planning? 1. Write out a detailed plan for accomplishing your goals.2. Replace money myths with money truths.3. Regularly monitor and reassess your financial plan.
What best describes how Americans are being outsmarted by banks and other lenders? Credit is marketed so well that we desire to have it while completely dismissing the fact that interest rates and fees continue to destroy our financial well-being.
Personal financial success is primarily the result of? Managing your money behavior
What best explains why income alone does not determine wealth? How much money a person makes does not dictate his or her spending and saving behavior.
What are 3 consequences of spending more money than what you make? 1. Missed opportunity to save and invest2. Stress3. A cycle of debt
3 True statements 1. Americans learned to borrow amidst post- WWII prosperity2. After 1970, consumer debt skyrocketed3. As banks made higher profits, they were willing to lend more money to consumers.
When it comes to managing money, success is about _____% knowledge and ______% behavior. 20, 80
The widespread financial insecurity of Americans is primarily because; The saving rate of Americans is low and many borrow in order to spend more than they earn.
What is not a factor in becoming money smart? Learn how to read your credit card statements.
What is NOT a benefit of understanding your own money personality? Knowing your money personality allows you to excuse excessive spending because it is simply a part of your nature.
Why was the use of credit uncommon prior to 1917? 1. Laws prevented lenders from charging high interest rates.2. Borrowing money was generally not socially acceptable.3. Lending money to others was not profitable.
When it comes to personal finance, the math is easy. What’s challenging is managing your _________ Behavior
What is NOT a reason credit is marketed heavily to consumers in the United States? The use of credit is not socially acceptable in the United States.
During the Great Depression, New Deal policy makers came up with mortgage and consumer lending policies that convinced commercial banks that; Consumer credit was profitable.
True financial security is achieved when your money begins to generate an income- your money starts working for you. True
Since you are a teenager, what you do now with money will have little effect on your financial future. False
Most Americans today are wealthy and will have financial security when they retire. False
Most Americans avoid the use of credit when it comes to buying big-ticket items like a car or furniture for their home. False
Learning the language of money is not that important because you will be able to depend on financial planners to organize your money. False
Having debt keeps you from building wealth. True
The credit system today is structured to accommodate a state of uncertain employment and income instability, utilizing high interest rates and fees to turn huge profits. True
Expensive houses and new cars are a true indication of wealth. False
When developing a personal financial plan, one of the first things you should do is assess your current financial situation. This includes your income, assets, and liabilities. True
Everyone should have the same financial plan. A budget that works for one person should be sufficient for everyone. False
Explain why understanding your money personality is important when it comes to developing a money plan that is right for you. You need to know your money personality so you can budget your money in a way that works for your personality.
Review the Chapter 1, Section 2 segment titled, “What’s You Money Personality?” Which of the four student responses most matches your view on money. Money isn’t everything because I believe that you can still do things even if you do not have money. Money is not the most important thing in the world.
Review the sidebar content in Chapter 1, Section 2 titled, “Teen money attitudes shifted with the recent recession.” Write a paragraph summarizing the ways in which teen attitudes toward money, work, and family changed during the recent recession. Teens attitudes toward money changed to where they know that money is not everything and their parents are trying hard to fix it.
Explain how marketing can affect your decisions when it comes to spending money. If an item is marketed where it sounds like a good deal, you are more likely to buy it.
Describe some of the mistakes Americans often make when it comes to money. They do not have a budget, or they think that you have to have a credit score.
Does managing your money well mean that you can not have fun with your money? Explain your answer. No, you can budget “fun” money when you make your plan.
Does the “history of credit and consumerism” segment make you view the use of credit differently than you did before? Explain Yes, I thought you had to have credit to buy things and now I know that it is a misconception.
A person or business that offers loans at extremely high interest rates loan shark
A person or organization that uses a product or service consumer
An obligation of repayment owed by one party to a second party. debt
The granting of a loan and the creation of debt; any form of deferred payment credit
The knowledge and skill set necessary to be an informed consumer and manage finances effectively. financial literacy
A fee paid by a borrower to the lender for the use of borrowed money interest
A system by which goods and services are produced and distributed economy
A debt evidenced by a “note”, which specifies the principal amount, interest rate, and date of repayment loan
A period of temporary economic decline during which trade and industrial activity are reduced; generally identifiedd by a fall in gross domestic product. recession
All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, Personal finance
What do you hope to learn and gain from this class? I hope to learn everything from this class. I want to go into accounting so personally this class is perfect for me. Plus it will help me in my college accounting class.

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