Allowance for children and teens

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Reference no: EM13745115

1) Which of the following is the smartest way to handle allowance for children and teens?

a. Pay your children and teens according to the work that they do.
b. Never pay for chores of any type, since children of all ages should be expected to help out as members of the family.
c. Increase allowance annually based on the child's age.
d. Give allowance when children have performed well in school or exhibited exemplary behavior.

2) When you talk to your children about money, you should strive to

a. protect them from knowledge of bills and other weighty financial matters
b. instill a healthy fear of spending money on anything but necessities
c. give them positive messages about the value of earning and saving money
d. let them know that you are financially secure and can provide for all of their needs and wants, even if you cannot

3) Which of the following is the best strategy for bill paying in a family?

a. The head of household or person with the highest income should be in charge of paying bills.
b. The person with the greatest understanding of finances should be in charge of paying bills.
c. Take turns paying the bills on a rotating basis.
d. Pay bills together. It should be a family affair.

4) What are the consequences of withdrawing money from a 529 plan to pay for expenses not associated with higher education?

a. You must replace any withdrawals within 60 days or pay a 25% federal penalty tax.
b. You must pay income taxes on the earnings as well as a 10% federal penalty tax.
c. You may incur a tax if you withdraw more than half of the account.
d. There are no penalties as long as your adjusted gross income is below $110,000 (for a single filer) or $220,000 (for joint filers).

5) An accurate description of a 529 plan is

a. a retirement savings plan offered by employers that allows you to save up to $17,000 a year tax-deferred
b. a tax-advantaged plan that allows anyone, regardless of income, to save for future college expenses
c. a custodial account that adults can set up for children with the child as owner
d. a retirement plan offered by nonprofit employers similar to a 401(k)

6) Which of the following best describes the Federal Direct PLUS loan?

a. A need-based loan that lets you borrow up to the full cost of tuition, minus any financial aid that you receive
b. A need-based federal loan with a lower, variable rate for those with high credit scores
c. A $5,500 maximum annual loan with a fixed rate of just 3.4%
d. A loan available to people of all income levels that allows a parent to borrow up to the full cost of attending college, minus any financial aid your child receives

7) After paying off debt and establishing an emergency fund, your top savings priority should be which of the following?

a. Saving for retirement
b. Saving for your child's college education
c. Saving for a down payment on a house
d. Saving for a vacation

8) If your child receives a gift of money, you should

a. let your child spend it as she wishes, since it is her money
b. make your child save it for college
c. teach your child to spend 10%, give away 10% and save 80%
d. encourage your child to spend 90% and save 10%

9) According to Suze, under what circumstances might you consider cosigning a loan for a family member?

a. Your family member has a low credit score due to poor credit management and he really needs a car to get to work.
b. Your family member signs a promissory note to you stating when she will begin making monthly payments on this loan and that she is in fact responsible for this loan.
c. Cosigning the loan will help the family member establish a credit history, which in turn will help him in all other aspects of his financial life.
d. You should not cosign a loan for a family member.

Reference no: EM13745115

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