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As much as you may hate to admit it, money makes the world go ‘round, and understanding how your money works (or doesn’t work) for you determines whether you’ll be along for the ride or left in the dust.
Knowing the basics – your income, expenses, debts and savings – is the first step toward taking control of your money and improving your financial well-being. In fact, if you’re like most people, learning basic money management skills today can help you take more control of your financial future.
A survey from the National Endowment for Financial Education shows that 76 percent of adults in the United States feel financial stress and nearly half (49 percent) of adults live paycheck to paycheck.[1] The good news is that according to National Financial Credit Counseling’s annual survey, 75 percent agree that getting answers to their financial questions from a professional would benefit them.[2]
Take this short quiz to see how much you know about money management and where you can improve, then explore additional resources with advice from PNC’s professionals to you help take control now and establish healthy financial habits.
a. 100 percent
b. 70 percent
c. 50 percent
d. 30 percent
a. Around $175,000
b. Around $250,000
c. Around $375,000
d. Around $550,000
a. Advance medical directive
b. Durable power of attorney
c. Revocable trust
d. All of the above
a. Pull money out of your investments until the market is stable
b. Keep calm and call your financial advisor
c. Invest all of your available funds
d. Time the markets by buying assets that are doing well and reducing your exposure to assets that are declining
a. They accumulate cash value
b. They can provide a beneficiary with a death benefit
c. The premiums can be higher than for term insurance
d. All of the above
a. Six months
b. One year
c. Five years
d. Forever
Correct answer: 70 percent
Every family is different, but generally, a good allocation plan is as follows:
Learn more about how to create and stick to a budget »
Correct answer: False
Generally, the biggest obstacle to homeownership is having enough money for the down payment and closing costs, and most first-time homebuyers haven’t saved enough to put down the full 20 percent. With a down payment of less than 20 percent, a buyer may need to pay for mortgage insurance. By putting down less than 20 percent, buyers can use any leftover cash for home improvements.
Learn the four steps to take before buying a home, then read about mortgage insurance and whether it can help you buy a home sooner than you thought »
Correct answer: Around $550,000
After 40 years, that investment could potentially be worth around $550,000 if you receive an 8 percent annual average return.
Learn more about how to review your retirement accounts and the four basic options you may have for 401(k)s to help reach your goals »
Correct answer: True
If you’re getting a large refund check, that means you’ve essentially loaned money to the U.S. government throughout the year, and they’re giving it back to you without interest. If your refund is close to $1,000, $2,000 or even higher, you might want to consider making some adjustments to your W-4.
Learn more about why bigger isn’t always better when it comes to tax refunds »
Correct answer: All of the above
Keeping financially fit begins with ensuring you have all the appropriate, up-to-date documents that reflect your present situation and wishes. Four fundamental building blocks should be included in most financial plans:
Learn more about how to check up on your financial wellness »
Correct answer: Keep calm and call your financial advisor
When it seems like the sky is falling, the natural reaction is to panic. It’s certainly easier said than done, but do your best to remain calm and remember that corrections and market downturns are normal and healthy. Contact your financial advisor for a financial check-up. Your advisor will check your asset allocation – what stocks, bonds and assets you are invested in – and help you determine how the rocky markets are affecting your financial health.
Learn more about how to handle a market downturn »
Correct answer: True
Roth IRA contributions are made after-tax, while Traditional IRA earnings accumulate on a tax-deferred basis until withdrawn. If you expect your tax rate will be lower when you retire, a traditional account may offer you more spendable income for retirement. If you expect your tax rate will be higher than it is now or the same upon retirement, a Roth account may provide you with more spendable income later.
Learn more about how to choose a retirement account »
Correct answer: All of the above
Permanent life insurance policies accumulate a cash value. They can offer protection for a lifetime and provide a beneficiary with a benefit upon your death. Because of this, and because of the lifetime coverage and the ability to build cash value on a tax-deferred basis, the premiums are higher than for term insurance.
Learn more about how life insurance can help offer the protection you need to reach your financial goals »
Correct answer: False
Some people think Medicare will cover everything and it certainly does not. Even people who have insurance can suffer financial hardship because of mounting medical bills. Before retirement, think carefully about the risks you may face and do what you can to plan for healthcare costs.
Learn more about how to plan for health costs in retirement »
Correct answer: Forever
Keep loan discharge documents forever, as one day you may need proof that you did, indeed, pay off a loan, including student loans and automobiles.
Learn more about what documents you need to save and what you can shred »
Every April, National Financial Literacy Month highlights the importance of financial well-being and teaches Americans how to establish and maintain healthy financial habits. PNC hosts financial education classes for tens of thousands of participants. These programs are at the core of PNC’s culture.
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1“Majority of Americans Resolve For Financial Well-Being in 2018,” https://www.nefe.org/What-We-Provide/Research/Search/Topic/0/Type/0/Year/0
2 “The 2016 Consumer Financial Literacy Survey,” https://nfcc.org/wp-content/uploads/2016/04/NFCC_BECU_2016-FLS_datasheet-with-key-findings_041516.pdf?_ga=1.167131006.153429275.1476469770
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