The Money Diaries Quiz 1: What Do You Know About Personal Finance?
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Financial Issues are cited among the Top 5 reasons people file for divorce
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True
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False
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This quiz is to test your knowledge of personal finance. What do you know about your money? Love,
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- 2.
"You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions." (IRS Publication 78)
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True
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False
Correct Answer
A. TrueExplanation
Donations to charity are tax deductible expenses. These donations can reduce your taxable income and lower your tax bill. Not everyone will be able to deduct their charitable contributions, however. You will need to itemize your tax deductions in order to claim any charity. (taxes.about.com)Rate this question:
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- 3.
Government bonds are "fancy IOUs" from Uncle Sam. They provide funding for special projects. You purchase a bond for a specific amount of time and in exchange the government pays you back with interest.
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True
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False
Correct Answer
A. TrueExplanation
Bonds are among the many options of places to keep your money and hope that it grows. Most people recommend that you diversify your money, putting it in mutual funds, stocks, and or retirement accounts. Don't put your money all in one place.Rate this question:
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- 4.
Which of these can potentially damage your credit score?Question taken from: howstuffworks.com
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Making late payments
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Closing a credit account with a low balance and high limit
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Making only the minimum monthly payment
Correct Answer
A. Making late paymentsExplanation
Paying bills late affects your credit score the most. Late payments go on your credit history, which makes up 35 percent of your score. In second place is closing a credit account with a high limit and low balance, because your debt-to-credit ratio makes up 30 percent of your score.Rate this question:
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- 5.
For my knowledge: I enjoy TheMoneyDiaries.com (doesn't count towards score)
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True
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False
Correct Answer
A. TrueRate this question:
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- 6.
What is a 401(k) plan?
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A savings account through the government that is not taxed and grows above the inflation rate.
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A type of retirement account that you only pay income tax on when you make withdrawals.
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A retirement account through your employer. Contributions are made before tax is taken out of your paycheck and most companies match up to a certain amount of your contributions.
Correct Answer
A. A retirement account through your employer. Contributions are made before tax is taken out of your paycheck and most companies match up to a certain amount of your contributions.Explanation
401(k) is a type of retirement account that, when contributed to, gives you an immediate tax deduction, tax-deferred growth on your savings, and usually, a matching contribution from your company (money.cnn.com). When I worked at Apple, I contributed the maximum amount into my 401(k) because Apple matched up to a certain amount at the end of the year. FREE MONEY PEOPLE.Rate this question:
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- 7.
You start working for a company that offers you a 401(k) retirement plan, the company will match up to 50% of your contribution, what should you do?
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Don't take money out of your paycheck for a retirement plan you can't touch until you're 65.
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Begin contributing the maximum amount out of your paycheck. You'll be getting free money from your company towards retirement. It's the easiest way for you to start saving.
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Contribute 5% from your paycheck, you need more cash.
Correct Answer
A. Begin contributing the maximum amount out of your paycheck. You'll be getting free money from your company towards retirement. It's the easiest way for you to start saving.Explanation
If you can, you should definitely contribute the maximum amount into your 401(k). Usually that's about 10% of your paycheck. The money is taken out before tax so you don't get taxed until you withdraw the money later. 401(k)s are a great way to get free money from your employer because most employers will match up to a certain amount.Rate this question:
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- 8.
In the credit card industry, what type of person is a revolver?
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A person who applies for too many credit cards
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A person who pays their minimum balance every month
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A person who pays off their total credit card balance on time every month
Correct Answer
A. A person who pays their minimum balance every monthExplanation
A revolver is what the credit card companies live for! These people rack in all the dough so that credit card companies thrive. Make sure you pay off your card every month so you aren't giving away money through interest rates.Rate this question:
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- 9.
Taxes: If you get a big tax refund each year, you're having too little withheld from your paycheck.
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True
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False
Correct Answer
A. FalseExplanation
You get a big refund each year if you're having too much withheld from your paycheck. Essentially, you're giving the government an interest free loan, meaning you've paid the government too much. You could have saved more money and let your money grow at a higher interest rate. If you do get a big check back, make sure you do something smart with it, like put it in savings.Rate this question:
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- 10.
What is the number one reason people go into debt?
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Bad spending habits
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Drug abuse
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Medical bills
Correct Answer
A. Medical billsExplanation
While bad spending habits and drug abuse can lead many people to debt, the number one reason why people go into debt is for MEDICAL reasons. Many people don't want to talk about medical issues being the reason because it is often too sensitive. But of course, bad spending habits can lead to a large amount of stress when you find yourself with too much "stuff" and nothing to show for your worth. The number two reason people go into debt is a change of circumstance like a divorce or unemployment. Know what you're spending my friends!Rate this question:
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- 11.
A question for the early 20 somethings:What should a college student do to take steps towards financial independence? (Check all that apply)
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They should track their income, and track their spending.
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Call an insurance provider about setting up Life Insurance.
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Have an independent checking and savings account at a bank.
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Apply for a credit card - start building credit. (Make sure they know the rules of success).
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Be educated. Learn that know one will care about money management better than you will. Take responsibility for yourself.
Correct Answer(s)
A. They should track their income, and track their spending.
A. Have an independent checking and savings account at a bank.
A. Apply for a credit card - start building credit. (Make sure they know the rules of success).
A. Be educated. Learn that know one will care about money management better than you will. Take responsibility for yourself.Explanation
It's hard to feel like it's important or necessary to keep track of expenses and build financial independence. The truth is, even though it's hard or annoying now, it will be much more difficult when you don't have money from you parents to be financially successful without having solid money saving and managing habits. Almost everyone out of college will you tell you they wished they saved more in college, when they could, when it was easy.Rate this question:
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Quiz Review Timeline (Updated): Mar 21, 2023 +
Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
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Current Version
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Mar 21, 2023Quiz Edited by
ProProfs Editorial Team -
Mar 12, 2011Quiz Created by
Themoneydiaries
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