WISE Financial Literacy Test Updated Study
Guide Questions and Answers (2026) |
Focused Revision Pack | Grade A+
• Sources of income . Answer: Wages and tips, capital gains, savings and investment
vehicles, gifts, and real estate
• Number one source of income . Answer: Salaries, Wages and tips
• Liquidity . Answer: How easily assets can be converted to cash
• Highly liquid products . Answer: Checking account
• Low liquidity products . Answer: Real estate
• Gift cards . Answer: Preloaded with money and used like cash/debit card; inactivity
fees set in after a year
• Discretionary income . Answer: Money left over after all mandatory expenses are paid
• Budget surplus . Answer: When you over budget and have money left over
• Budget variance . Answer: A difference in what you budgeted and what you actually
spent (can be positive or negative)
• Fixed expenses . Answer: Expenses that remain consistent month to month (e.g., car
payment, mortgage)
• Variable expenses . Answer: Expenses that change month to month (e.g., utilities,
groceries)
• Money orders . Answer: Form of payment you can get at a post office or store that
functions like a guaranteed check
• Value of US currency . Answer: It is backed by the full faith and credit of the US
government
• Inflation impact . Answer: People on fixed incomes are most hurt by inflation
• Pay yourself first . Answer: After paying for necessary expenses, put money away in
savings
• Deposit notification . 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) . Answer: A low risk investment vehicle; cashing it before
maturity incurs a penalty fee
• Pawn Shops . Answer: Charge high interest, with a short amount of time to pay back
• Payday lenders . Answer: Charge high interest and risk a cycle of debt; should be
avoided
• Credit union advantage . Answer: Lower interest rates compared to banks
• Overdraft protection . Answer: Allows you to overdraft your account up to a preset
amount; a fee occurs if this happens
• Opt-in regulation . Answer: Regulates when financial institutions can charge fees for
overdraft
• Compound Interest . Answer: Interest on interest
• Time value of money . Answer: The value of money over time; money now is worth
more than money in the future because of inflation
• Rule of 72 . Answer: 72 divided by the interest rate equals the number of years it takes
an investment to double
• Reconciling a checking account . Answer: Done at the end of each month to ensure
expenses and balance match up
• Grace period for student loans . Answer: Period given before you have to start paying
the loan back (usually 6 months)
• Subsidized loans . Answer: Interest does not accumulate while in school
• Unsubsidized loans . Answer: Interest does accumulate right away
• Paying back loans . Answer: You should try to pay private loans back first because
interest rates are typically higher
• Closed End Credit . Answer: One time loan usually paid in installments (car loan,
mortgage, student loan)
• Open End Credit . Answer: Credit can be utilized as long as it is available without
having to reapply (credit cards, store charge cards)
• Truth in Lending Act . Answer: Requires creditors to disclose important info like APR to
borrowers
Guide Questions and Answers (2026) |
Focused Revision Pack | Grade A+
• Sources of income . Answer: Wages and tips, capital gains, savings and investment
vehicles, gifts, and real estate
• Number one source of income . Answer: Salaries, Wages and tips
• Liquidity . Answer: How easily assets can be converted to cash
• Highly liquid products . Answer: Checking account
• Low liquidity products . Answer: Real estate
• Gift cards . Answer: Preloaded with money and used like cash/debit card; inactivity
fees set in after a year
• Discretionary income . Answer: Money left over after all mandatory expenses are paid
• Budget surplus . Answer: When you over budget and have money left over
• Budget variance . Answer: A difference in what you budgeted and what you actually
spent (can be positive or negative)
• Fixed expenses . Answer: Expenses that remain consistent month to month (e.g., car
payment, mortgage)
• Variable expenses . Answer: Expenses that change month to month (e.g., utilities,
groceries)
• Money orders . Answer: Form of payment you can get at a post office or store that
functions like a guaranteed check
• Value of US currency . Answer: It is backed by the full faith and credit of the US
government
• Inflation impact . Answer: People on fixed incomes are most hurt by inflation
• Pay yourself first . Answer: After paying for necessary expenses, put money away in
savings
• Deposit notification . 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) . Answer: A low risk investment vehicle; cashing it before
maturity incurs a penalty fee
• Pawn Shops . Answer: Charge high interest, with a short amount of time to pay back
• Payday lenders . Answer: Charge high interest and risk a cycle of debt; should be
avoided
• Credit union advantage . Answer: Lower interest rates compared to banks
• Overdraft protection . Answer: Allows you to overdraft your account up to a preset
amount; a fee occurs if this happens
• Opt-in regulation . Answer: Regulates when financial institutions can charge fees for
overdraft
• Compound Interest . Answer: Interest on interest
• Time value of money . Answer: The value of money over time; money now is worth
more than money in the future because of inflation
• Rule of 72 . Answer: 72 divided by the interest rate equals the number of years it takes
an investment to double
• Reconciling a checking account . Answer: Done at the end of each month to ensure
expenses and balance match up
• Grace period for student loans . Answer: Period given before you have to start paying
the loan back (usually 6 months)
• Subsidized loans . Answer: Interest does not accumulate while in school
• Unsubsidized loans . Answer: Interest does accumulate right away
• Paying back loans . Answer: You should try to pay private loans back first because
interest rates are typically higher
• Closed End Credit . Answer: One time loan usually paid in installments (car loan,
mortgage, student loan)
• Open End Credit . Answer: Credit can be utilized as long as it is available without
having to reapply (credit cards, store charge cards)
• Truth in Lending Act . Answer: Requires creditors to disclose important info like APR to
borrowers
