Wise Financial Literacy Test Study Guide
UPDATED Questions and CORRECT
Answers
Sources of income - CORRECT ANSWER - Wages and tips, capital gains, savings and
investment vehicles, gifts, and real estate
Number one source of income - CORRECT ANSWER - Salaries, Wages and tips
Liquidity - CORRECT ANSWER - How easily assets can be converted to cash
Highly liquid products - CORRECT ANSWER - Checking account
Low liquidity products - CORRECT ANSWER - Real estate
Gift cards - CORRECT ANSWER - Preloaded with money and used like cash/debit card;
inactivity fees set in after a year
Discretionary income - CORRECT ANSWER - Money left over after all mandatory
expenses are paid
Budget surplus - CORRECT ANSWER - When you over budget and have money left over
Budget variance - CORRECT ANSWER - A difference in what you budgeted and what
you actually spent (can be positive or negative)
Fixed expenses - CORRECT ANSWER - Expenses that remain consistent month to month
(e.g., car payment, mortgage)
, Variable expenses - CORRECT ANSWER - Expenses that change month to month (e.g.,
utilities, groceries)
Money orders - CORRECT ANSWER - Form of payment you can get at a post office or
store that functions like a guaranteed check
Value of US currency - CORRECT ANSWER - It is backed by the full faith and credit of
the US government
Inflation impact - CORRECT ANSWER - People on fixed incomes are most hurt by
inflation
Pay yourself first - CORRECT ANSWER - After paying for necessary expenses, put
money away in savings
Deposit notification - CORRECT ANSWER - If a person makes a deposit of $10,000 or
more into a bank account, the bank must notify the US Treasury Dept
CD (Certificate of Deposit) - CORRECT ANSWER - A low risk investment vehicle;
cashing it before maturity incurs a penalty fee
Pawn Shops - CORRECT ANSWER - Charge high interest, with a short amount of time to
pay back
Payday lenders - CORRECT ANSWER - Charge high interest and risk a cycle of debt;
should be avoided
Credit union advantage - CORRECT ANSWER - Lower interest rates compared to banks
Overdraft protection - CORRECT ANSWER - Allows you to overdraft your account up to
a preset amount; a fee occurs if this happens
UPDATED Questions and CORRECT
Answers
Sources of income - CORRECT ANSWER - Wages and tips, capital gains, savings and
investment vehicles, gifts, and real estate
Number one source of income - CORRECT ANSWER - Salaries, Wages and tips
Liquidity - CORRECT ANSWER - How easily assets can be converted to cash
Highly liquid products - CORRECT ANSWER - Checking account
Low liquidity products - CORRECT ANSWER - Real estate
Gift cards - CORRECT ANSWER - Preloaded with money and used like cash/debit card;
inactivity fees set in after a year
Discretionary income - CORRECT ANSWER - Money left over after all mandatory
expenses are paid
Budget surplus - CORRECT ANSWER - When you over budget and have money left over
Budget variance - CORRECT ANSWER - A difference in what you budgeted and what
you actually spent (can be positive or negative)
Fixed expenses - CORRECT ANSWER - Expenses that remain consistent month to month
(e.g., car payment, mortgage)
, Variable expenses - CORRECT ANSWER - Expenses that change month to month (e.g.,
utilities, groceries)
Money orders - CORRECT ANSWER - Form of payment you can get at a post office or
store that functions like a guaranteed check
Value of US currency - CORRECT ANSWER - It is backed by the full faith and credit of
the US government
Inflation impact - CORRECT ANSWER - People on fixed incomes are most hurt by
inflation
Pay yourself first - CORRECT ANSWER - After paying for necessary expenses, put
money away in savings
Deposit notification - CORRECT ANSWER - If a person makes a deposit of $10,000 or
more into a bank account, the bank must notify the US Treasury Dept
CD (Certificate of Deposit) - CORRECT ANSWER - A low risk investment vehicle;
cashing it before maturity incurs a penalty fee
Pawn Shops - CORRECT ANSWER - Charge high interest, with a short amount of time to
pay back
Payday lenders - CORRECT ANSWER - Charge high interest and risk a cycle of debt;
should be avoided
Credit union advantage - CORRECT ANSWER - Lower interest rates compared to banks
Overdraft protection - CORRECT ANSWER - Allows you to overdraft your account up to
a preset amount; a fee occurs if this happens
