Money After High School

Score: / 10

Circle the best answer for each question. Each question is worth 1 point.

You work 40 hours at $13 an hour, but your deposit is about $454.
1. What explains the difference?
- A. Social Security, Medicare, and income tax withholding were taken out.
- B. Your employer kept a tip.
- C. The bank charged a fee for direct deposit.
- D. First paychecks are always reduced.
2. If a raise moves you into a higher tax bracket, all of your income is taxed at the higher rate.
True/False
You earned a little from a summer job and had federal income tax withheld, but you're not required to file a return.
3. Why might you file anyway?
- A. To get back withheld tax you didn't owe as a refund
- B. Filing raises your credit score
- C. It's required for a driver's license
- D. There's no reason
A landlord requires income of 3× the rent. The apartment is $1,000 a month.
4. What monthly income is required?
- A. $1,000
- B. $3,000
- C. $2,000
- D. $4,000
You're buying a used car.
5. Which approach protects you best?
- A. Tell the dealer your ideal monthly payment
- B. Take the longest loan offered
- C. Get pre-approved, negotiate the total price, and have a mechanic inspect the car
- D. Skip insurance quotes until after buying
Your health plan has a $2,000 deductible and 20% coinsurance. You get a $7,000 covered bill (below your out-of-pocket max).
6. How much do you pay?
- A. $2,000
- B. $1,400
- C. $7,000
- D. $3,000
College A's sticker price is $40,000 with $28,000 in aid. College B's is $22,000 with $5,000 in aid.
7. Which has the lower net price?
- A. College A, at $12,000
- B. College B, at $17,000
- C. They're the same
- D. College B, because its sticker price is lower
8. Interest on unsubsidized federal student loans starts building while you're still in school.
True/False
Your employer matches 100% of 401(k) contributions up to 3% of pay, but you contribute nothing.
9. What's happening?
- A. You're saving money by not contributing
- B. You're giving up free money your employer would add
- C. The employer contributes anyway
- D. Matches only apply after age 30
You're changing jobs and have $6,000 in your old 401(k).
10. What's usually the best move?
- A. Cash it out to buy something fun
- B. Leave it or roll it into your new plan or an IRA, keeping it invested for retirement
- C. Withdraw it to pay a penalty
- D. Give it to your old employer

Answer key

Money After High School · Short version

1. A. Social Security, Medicare, and income tax withholding were taken out. (Final review)Gross pay minus deductions equals net pay.
2. False (Final review)Only the dollars in the higher bracket are taxed at the higher rate.
3. A. To get back withheld tax you didn't owe as a refund (Final review)Refunds only come back if you file.
4. B. $3,000 (Final review)3 × $1,000 = $3,000.
5. C. Get pre-approved, negotiate the total price, and have a mechanic inspect the car (Final review)Pre-approval, total-price negotiation, and an inspection prevent the most expensive mistakes.
6. D. $3,000 (Final review)$2,000 deductible + 20% of the remaining $5,000 ($1,000) = $3,000.
7. A. College A, at $12,000 (Final review)A: $40,000 − $28,000 = $12,000. B: $22,000 − $5,000 = $17,000.
8. True (Final review)That's the key difference from subsidized loans.
9. B. You're giving up free money your employer would add (Final review)The match only happens if you contribute. It's part of your pay.
10. B. Leave it or roll it into your new plan or an IRA, keeping it invested for retirement (Final review)Cashing out usually means income tax plus a 10% penalty if you're under 59½, and lost growth.