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How Money Savy are You?

Welcome to the Basic Financial Literacy Assessment! This 10-question, multiple-choice quiz is designed to test your understanding of essential personal finance topics, such as budgeting, saving, credit management, and investing. 

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Question 1 of 10

What is a budget?

A

A list of your debts

B

A record of past purchases

C

A type of bank account

D

A tool for managing your money

Question 2 of 10

What does "pay yourself first" mean in financial planning?

A

Spend money on things you want

B

Save a portion of your income before spending

C

Pay your bills before saving

D

Treat yourself to a reward after budgeting

Question 3 of 10

What is compound interest?

A

Interest earned on both principal and previously earned interest

B

Interest calculated only on the initial principal

C

Interest that decreases over time

D

Interest charged for late payments

Question 4 of 10

Which of the following is an example of a fixed expense?

A

Groceries

B

Entertainment

C

Rent or mortgage

D

Clothing

Question 5 of 10

What is the purpose of an emergency fund?

A

To pay for vacations

B

To cover unexpected expenses

C

To invest in the stock market

D

To buy luxury items

Question 6 of 10

What does a credit score measure?

A

Your total income

B

Your ability to repay debts

C

The number of loans you have

D

How much you save monthly

Question 7 of 10

What is the best way to avoid paying interest on a credit card?

A

Make only the minimum payment each month

B

Pay off the entire balance each month

C

Use your credit card for small purchases only

D

Avoid using a credit card

Question 8 of 10

What is diversification in investing?

A

Putting all your money in one stock

B

Investing in only high-risk stocks

C

Spreading investments across various assets to reduce risk

D

Avoiding investments altogether

Question 9 of 10

What is the primary benefit of a 401(k) retirement account?

A

Employer matching contributions and tax advantages

B

Immediate access to funds anytime

C

High-interest rates compared to savings accounts

D

No contribution limits

Question 10 of 10

What is the term for the difference between your assets and liabilities?

A

Budget

B

Cash flow

C

Credit score

D

Net worth

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