Money Fundamentals

Score: / 10

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

You receive your first paycheck and notice the amount deposited into your account is lower than your gross pay.
1. Why?
- A. The bank charged a fee for the deposit.
- B. Taxes and other deductions were withheld before you were paid.
- C. Your employer made a mistake.
- D. Paychecks are always rounded down.
You take home $1,200 a month. Your needs: rent share $400, phone $50, gas $80, groceries $150.
2. How much is left for wants and savings?
- A. $420
- B. $620
- C. $520
- D. $680
Your car needs a $700 repair to get to work. You have $900 in your emergency fund.
3. What's the best choice?
- A. Pay from the emergency fund, then rebuild it.
- B. Put it on a credit card so the fund stays untouched.
- C. Skip the repair and miss work.
- D. Take out a short-term loan.
4. At a hypothetical 6% yearly return, roughly how many times larger would an amount become in 36 years?
- A. About 3 times
- B. About 6 times
- C. About 36 times
- D. About 8 times
A family kept $10,000 in cash at home for 20 years. Over that time, prices roughly doubled.
5. What happened to that money?
- A. It's still $10,000, but it buys about half as much.
- B. It doubled along with prices.
- C. Nothing — cash is safe from inflation.
- D. It's now worth $5,000 in dollars.
You never opted in to overdraft coverage for debit card purchases. You try to buy $30 of groceries with $20 in your account.
6. What most likely happens?
- A. The purchase goes through and you're charged an overdraft fee.
- B. The bank takes the money from your savings automatically.
- C. The purchase is declined, with no overdraft fee.
- D. The bank lends you the money interest-free.
You'll need $3,000 for college move-in costs in 10 months.
7. Which is the best home for this money?
- A. A stock index fund
- B. Your checking account, next to your spending money
- C. A few individual stocks
- D. A high-yield savings account
8. Which purchase is best described as having both a need part and a want part?
- A. A $900 phone when a $250 phone would meet your needs
- B. The electricity bill
- C. Rent for a basic apartment
- D. A $6 coffee-shop drink
9. The account with the highest advertised APY is always the best choice.
True/False
You set up an automatic $40 transfer to savings every payday. You're paid every two weeks.
10. How much will you have saved after one year, before interest?
- A. $480
- B. $960
- C. $1,040
- D. $1,200

Answer key

Money Fundamentals · Short version

1. B. Taxes and other deductions were withheld before you were paid. (Final review)Gross pay is what you earned. Net (take-home) pay is what's left after deductions like federal income tax, Social Security, and Medicare. That's why budgets start from take-home pay.
2. C. $520 (Final review)$400 + $50 + $80 + $150 = $680 in needs. $1,200 − $680 = $520 left for wants and savings.
3. A. Pay from the emergency fund, then rebuild it. (Final review)This is exactly what an emergency fund is for. Using it avoids interest. Then restart your regular contributions to refill it.
4. D. About 8 times (Final review)Rule of 72: 72 ÷ 6 = 12 years to double. 36 years is three doublings: 2 × 2 × 2 = 8 times.
5. A. It's still $10,000, but it buys about half as much. (Final review)The number of dollars didn't change, but each one buys less. When prices double, the same cash buys about half as much.
6. C. The purchase is declined, with no overdraft fee. (Final review)Banks need your permission (an opt-in) before charging overdraft fees on one-time debit card purchases. Without it, the purchase is usually declined.
7. D. A high-yield savings account (Final review)With a short timeline, the money must be there when you need it. Savings is safe, earns interest, and stays separate from spending money. Investments can drop in the short term.
8. A. A $900 phone when a $250 phone would meet your needs (Final review)A working phone is a need for many people; the extra $650 is the want part. Electricity and basic rent are needs, and a fancy coffee is a want.
9. False (Final review)APY matters, but so do monthly fees, minimum balances, withdrawal limits, and whether deposits are insured. A high rate can be wiped out by fees.
10. C. $1,040 (Final review)Every two weeks means 26 paychecks a year. 26 × $40 = $1,040 — slightly more than you'd get with 24 twice-a-month paychecks.