FIN 235 Exam 1 Questions With Correct Verified Answers Distinction Guaranteed.

Formula for Financial Success - correct answer savings + aggressive tax- deferred growth (invest)+time = wealth American Dream - correct answer Financial stability Happiness Home Family Good Job 3 biggest regrets retired people have - correct answer 1. Not saving money sooner 2. Wish they traveled more 3. Wish they chose a different career Financial Lifecycle (3 components) - correct answer Early Years (0-30) Setting foundation Good earning years (30-60) Peak period Retirement years (60+) Enjoyment Considerations for your Long Term Financial Plan - correct answer 1. Investment Strategy 2. House Planning 3. Debt Planning 4. Car Planning 5. Insurance Strategy 6. Finance College 7. Tax planning 8. Retirement Planning 9. Employment benefit planning 10. Assembling your long term financial team Who should be on your Long Term Financial Team? - correct answer CPA, Financial Planner, Insurance Agent, Realtor, Banker, Lawyer, Spouse Setting Financial Goals - correct answer Short Term (next 12 months) have 3-6 month expenses in liquid cash account. Reduce credit card debt Mid-Term (Next 5 years) ex) buy a new used car, save for 20% down payment on house Long Term (Over 5 years away) invest in 401K and Roth IRA Financial Rules for 20-somethings - correct answer 1. Make Financial Plan 2. Live below means 3. Make savings a habit 4. Eliminate CC debt 5. Start Investment Program 6. Establish your credit 7. Have marketable skill 8. Cut the financial umbilical cord (release from bank of Dad) 9. Marry Wisely 10. Have fun Sources of income you should NOT count on - correct answer 1. Inheritance 2. Social Security 3. Lottery Control Spending by controlling the BIG 5! - correct answer 1. Food 2. Transportation 3. Shelter 4. Insurance 5. Taxes () The 15% rule... - correct answer pay yourself first! (write a check to your savings acct) 5 ways to stop money hemorrhaging - correct answer 1. Never touch cash (can't track bc no receipts) 2. Use one simple checking acct 3. Use debit card (because your own money and no interest) 4. Direct deposit all sources of income (no cash in hand, no spending) 5. Make your savings unavailable (set up automatic draft from checking once a month to help save money) Opportunity Cost - correct answer The opportunity that must be forgiven in order to pursue a certain action. Give up something to get something...give up that extra slice of pizza so you can have some ice cream 5 things you can do with money - correct answer 1. Save it 2. Spend it 3. Invest it 4. Borrow or Lend 5. Give it Aunt Jane's 3 rules for Financial Success - correct answer 1. Never let your money sit idle (invest) 2. Never pay more for something than you need to (Shop on sale) 3. Never pass up anything that is free!!! 80/10/10 rule - correct answer Live on 80% Save 10% Give away 10% Look over all the advice for newly weds... - correct answer -communication is key -good to have keep some independence and build your own credit -Combining assets are fine, don't combine debts -