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A Money Quiz

A Money Quiz

 

            Managing money is a skill that needs constant updating.  How are your money skills doing?  Try the following quiz to see how far your dollars are stretching for you.

 

1. If you don't owe taxes, you won't be penalized for filing your federal income tax return after April 15.  True or False

True is correct. Sorry, wrong! is incorrect.

The right answer is A. True.

The penalty for missing the filing deadline is a percentage of the tax owed with the return. If the IRS owes you, there is no penalty. Taxpayers who have refunds coming really don't have to worry about the deadline. Of course, the sooner in the year you file, the sooner you'll get your tax return in your pocket.


2. Contributions to a traditional 401(k) plan are deducted from your salary before or after taxes?

Before is correct.  Sorry, wrong! is incorrect.

The right answer is A. Before.

Your traditional 401(k) contributions are made before taxes, reducing the amount of income Uncle Sam can tax.  Because 401(k)s are tax-deferred investment plans, you don't pay taxes on earnings now, but you will have to pay when you withdraw your money in retirement.

 

3. You can invest in only one 529 college savings plan per child. True or False.

 

You're right! B. False is correct.

False.  There is no law limiting the number of 529 plans you can invest in to save for a college education. Sometimes investing in more than one is a good idea.

 

4. Save and set aside an emergency "rainy day" fund to cover at least three months' worth of your expenses.  True or False.

True. Sorry, wrong! is incorrect.

The right answer is A. True.

You want to keep enough cash on hand so that you don't have to rack up expensive credit-card debt if you have an emergency. A three- to six-month stash is the oft-quoted guideline, and it's a good one.

 

5. You should aim to save at least 10% of your income each year. True or False.

 

True. Sorry, wrong! is incorrect.

The right answer is A. True.

Saving is a great habit to get into, and the more you can do it, the better off you'll be. If you can't spare 10% of your budget right off the bat, start small—squirreling away even as little as $50 a month can add up to a nice cushion given enough time.

 

6. Stay at home dads needs life insurance too? True or False

True.  Sorry, wrong! is incorrect.

The right answer is A. True.

They may not have an income, but stay-at-home parents provide valuable financial services to the household. If a stay-at-home parent were to die, the amount of needed to cover childcare costs, housekeeping, etc. could be astronomical.

 

7.When shopping online, it's best to use your credit card, not your debit card. True or False.

 

True. Sorry, wrong! is incorrect.

The right answer is A. True.

Generally, your liability for unauthorized purchases is lower with a credit card, so it is safest to use online just in case of ID theft. Plus, if your credit card number is stolen, or a computer glitch causes your order to be charged more than once, your checking account balance won't be affected while you iron things out.

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