Class of 2011: Christy Alvord
Class of 2012: Margaret Vallone
Class of 2013: Amber Elchert
Class of 2014: Elizabeth Morash
Top Responder: Karissa McCarthy '12
Want to learn more about personal finance? Check out the CashCourse website or read through the past contest questions and answers below:
Question: Creating a budget can seem like a daunting task, but using an expense worksheet can help you focus on how to best structure your money to begin achieving your goals. By writing down your expenses, you may also be able to determine areas of unnecessary spending and opportunities where you can cut back. Please find the page on www.cashcourse.org/muhlenberg that provides a link to an expense worksheet that you can print out and use.
Question: When deciding whether to save or invest your money, you need to consider your risk tolerance, which depends on goals and your anticipated time frame for using the money.
1. Which tends to earn more money overtime: Investments or Traditional Savings?
2. Which is riskier: Investments or Traditional Savings?
Answer: 1. Investments; 2. Investments
Question: The ________ is the preset amount of time in each monthly budget cycle that the credit card company will not charge you interest, as long as you pay the entire balance by the payment due date.
A. Grace period
B. Penalty-free period
C. Interest-free period
Answer: Grace period
Question: Your account balance from an ATM machine may not always be correct or up-to-date, as it may show a higher amount if you have outstanding checks that have not cleared yet.
True or False?
Answer: True - To always know your correct balance, be sure to write down how much you take out of the ATM or spend with your debit card, as well as balance your checking account each month.
Question: What are the six steps in creating a budget, or spending plan?
Answer: 1.) Identify income; 2.) List your expenses; 3.) Compare income with expenses; 4.) Make adjustments; 5.) Cut expenses; and 6.) Increase income
Question: What is the biggest difference between an Individual Retirement Account (IRA) and a Roth IRA?
A. Your choice of investments in stocks or bonds
B. How investments are taxed
C. The types of banks and brokerages where you can open the IRA
Answer: B. How investments are taxed
Question: A ______ allows you to structure your spending habits. It helps you organize your money by thinking in terms of spending categories, setting priorities, and establishing boundaries or limits that you can observe to pace how much you are spending.
Question: If you are in need for fast-cash, there are short-term fixes that can often be tempting. Many of these schemes, however, can often end up costing you more in the end. If you are asked to pay a fee for a job, it is probably a scam.
True or False?
Answer: True - You should never have to pay to get a job.
Question: Under federal law, what is your maximum liability for unauthorized use of your credit card?
Answer: A. $50
Question: To protect your credit you can check your credit score. What are the names of the three major agencies where you can get a free credit report?
Answer: Equifax, Experian, and TransUnion
Question: Healthcare coverage is extremely important for many reasons. Delaying medical treatment can lead to more serious and costly health problems, and large medical bills are one of the primary reasons people file for bankruptcy.
Match the following terms associated with healthcare coverage to their definitions:
1. Co-payment 2. Premium 3. Deductible
A. A _______ is the amount you pay each year for healthcare coverage. It is not only affected by your age, but also by the components of your policy.
B. A _______ is the amount that you must pay out of your pocket each year before your policy kicks in and typically range from $500 to $5,000 per year.
C. A _______ is an amount that you pay toward medical care, such as for a doctor’s appointment or hospital stay.
Answer: A. 2. Premium; B. 3. Deductible; C. 1. Co-payment
Question: What is the biggest difference between a savings account, such as a money-market, and an investment account, such as a mutual fund?
A. There is no difference
B. One offers interest, the other does not
C. One is offered by a bank and insured by the FDIC as a savings account, while the other is not because it is an investment
Answer: C. One is offered by a bank and insured by the FDIC as a savings account, while the other is not because it is an investment
Question: Even though overdraft protection can protect you if you withdraw too much money from your account when writing a check or using your debit card, you may still owe interest or fees on the little “loans” the bank gives you to cover your bounced checks. True or False?
Answer: True - For this reason, you should check your balance regularly so that you never accidentally withdraw too much.
October 18 Question: With the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD Act), credit card companies are prohibited from issuing credit cards to individuals under the age of ______ unless he or she can demonstrate the ability to make payments on their own or have a parent or guardian co-sign the application.
Answer: B. 21
Question: In order to spend less, it is better to pay with cash, check, or debit card, than with a credit card. This way, the amount is subtracted automatically, rather than on hold to be paid off later. True or False?
Answer: True - By paying with cash, check, or debit card, you avoid spending money that you do not already have.
Question: When you put your money in a _____________, you loan your money to a bank or credit union for a certain amount of time, such as three months, six months, one year, two years, or longer. The bank pays a set interest rate on your money over that time and returns the full amount when the period is up. The longer the amount of time, the higher the interest rate, but if you take the money out prior to the date of maturity, you may have to pay a penalty.
A. Savings account
B. Money market account
C. U.S. Savings Bond
D. Certificate of Deposit (CD)
Answer: D. Certificate of Deposit (CD)
Question: Creating an emergency fund separate from your general savings account is important so that you are prepared if ever faced with an unexpected expense or situation. In general, how many months of living expenses should you try to set aside to cover basic living expenses:
A. 1 month
B. 3 months
C. 6 months
Answer: B. 3 months
Question: When considering job opportunities in different geographic locations, in addition to comparing salaries, you need to compare the cost of living, as certain areas, such as cities, tend to be much more expensive. True or False?
Question: Protecting your credit is important, as maintaining a high credit score shows personal responsibility, while a low credit score is evidence that you may not always pay bills on time. Credit scores are important to bankers, mortgage lenders, landlords, and potential employers. What are the six criteria used to analyze your credit score risk level?
Answer: 1.) Bill paying habits; 2.) Collections; 3.) Debt Level; 4.) Credit History; 5.) Recent Activity; and 6.) Court Judgments or bankruptcies
Question: When you receive a paycheck, some funds are deducted for taxes. What are the four basic kinds of taxes?
Answer: Federal Income Tax, State Income Tax, Local Income Tax, and FICA (Federal Insurance Contributions Act)
Question: A number of factors can increase or decrease how much you pay for your auto insurance premium. Please read the following statements and indicate which is false:
A. Traffic tickets will not affect the price of your car insurance premium
B. Because statistics show that drivers under the age of 25 have a greater risk of being in an accident, car insurance is generally more expensive for college students
C. Choosing a higher deductible, the amount you pay before the insurance payments begin, can lower your premium cost
Answer: A. is False - Traffic tickets will increase your car insurance premium.
Question: What is the name of the form you complete for an employer that tells how much money they should deduct from your paycheck in taxes?
C. 1099 Form
Answer: B. W-4 Form
Question: Investments require you to take a risk, as there is always the possibility of losing some, or all your money. What is the relationship between risk and reward when investing?
A. The lower the risk, the higher the potential reward
B. The higher the risk, the lower the potential reward
C. The higher the risk, the higher the potential reward
Answer: C. The higher the risk, the higher the potential reward
Question: Why should you always try to pay the balance of your credit card bills each month, rather than just paying the minimum?
A. Overtime, you will end up paying more in interest, as interest is based on the entire account balance, not on each individual purchase.
B. You will not be able to apply for any other credit cards.
C. You will not be able to use that credit card until the balance is entirely paid off.
Answer: A. Overtime, you will end up paying more in interest, as interest is based on the entire account balance, not on each individual purchase.
Question: Overspending can occur unconsciously, but it is important to be aware of how much you are spending in order to keep track of your finances. What are the five most common reasons people overspend?
Answer: 1) Peer pressure 2) Want to feel good NOW 3) Don’t have, or ignore, financial goals 4) Keep up with neighbors or friends and 5) Addictive spending
Question: There is a one-year “grace period” before you have to begin repaying your students loans. True or False?
Answer: False - There is a 6-month grace period before you have to begin repaying your students loans.
Question: _______ _________ is a federal crime that occurs when someone uses another person's personal identification, such as name, Social Security number, or account number for unlawful activities.
Answer: Identity Theft
Question: Keeping track of ATM, debit card, or credit card transactions is very important. How often should you balance your checking account?
A. Every month
B. Every 3 months
C. Every 6 months
Answer: A. Every month
Question: When planning a budget, you should first account for bills and other major expenses such as tuition, room and board, books, and student fees. This way you will have a more accurate starting point from which to plan your budget for the rest of the semester.
True or False?
Question: If you are trying to build good credit or maintain a high credit score, what is the most important thing you can do?
A. Pay your bills on time
B. Maintain a balance on your credit cards and only pay the minimum each month
C. Avoid credit cards and loans altogether
Answer: A. Pay your bills on time
Question: To save money and live on a budget, it helps to understand the difference between wants and needs. Which of a following is a want?
A. Medicine when you are sick
B. Daily cup of Starbucks coffee
C. Monthly car insurance payments
Answer: Daily cup of Starbucks coffee