Real-World Examples of Personal Finance Decisions for Teens

📚 Quick Study Guide

• 💰 Budgeting: Creating a plan for how to spend your money. Track income and expenses to make informed choices.
• 🏦 Saving: Setting aside money for future goals. Consider opening a savings account and understanding interest rates.
• 💳 Credit: Borrowing money with the promise to repay it later, usually with interest. Understanding credit scores is crucial.
• 🤝 Investing: Using money to purchase assets with the goal of increasing wealth over time. Examples include stocks, bonds, and mutual funds.
• 🎯 Financial Goals: Specific, measurable, achievable, relevant, and time-bound (SMART) objectives related to your finances.
• 💸 Opportunity Cost: The potential benefits you miss out on when choosing one alternative over another.
• 📝 Taxes: Mandatory contributions to state revenue, levied by the government on workers' income and business profits.

Practice Quiz

1. What is the FIRST step you should take when creating a budget?
   1. A. Track your spending.
   2. B. Set financial goals.
   3. C. Increase your income.
   4. D. Cut all expenses.
2. Which of the following is an example of a short-term financial goal?
   1. A. Saving for retirement.
   2. B. Buying a car.
   3. C. Paying off student loans.
   4. D. Saving for a new phone.
3. What is the MAIN benefit of having a good credit score?
   1. A. Easier to get a job.
   2. B. Lower interest rates on loans.
   3. C. Higher social status.
   4. D. Free financial advice.
4. Which of the following is considered an investment?
   1. A. Buying a new video game.
   2. B. Putting money in a savings account.
   3. C. Purchasing stocks in a company.
   4. D. Buying a lottery ticket.
5. What does "opportunity cost" mean?
   1. A. The cost of missing an opportunity.
   2. B. The cost of the next best alternative you give up.
   3. C. The cost of an investment.
   4. D. The cost of living.
6. You want to buy a new pair of sneakers that cost $100, but you only have $60. What is the BEST strategy?
   1. A. Borrow the money from a friend without a plan to repay.
   2. B. Put the sneakers on a credit card and pay the minimum balance.
   3. C. Save $10 per week for 4 weeks.
   4. D. Buy a different item you can afford immediately.
7. Why is it important for teens to learn about taxes?
   1. A. So they can avoid paying them.
   2. B. To prepare for future financial responsibilities.
   3. C. To impress their friends.
   4. D. It's not important for teens.