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FINRA SIE Spending and Saving Plans — practice questions

Explore 7 free Spending and Saving Plans questions in FINRA SIE Finance. Open each question or exercise to read its content, reference answers and available explanation.

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Spending and Saving Plans questions and exercises with answers

Showing questions 1–7 of 7.

Pay arrives every two weeks. How is it converted into a monthly figure for a spending and saving plan?Read the answer and worked solution →Using the envelope method, how is a weekly spending amount worked out from a monthly plan figure?Read the answer and worked solution →When money is short, what does prioritizing bills actually mean?Read the answer and worked solution →In a priority list of unpaid bills, which one is given the number 1?Read the answer and worked solution →A spending and saving plan is built by setting which two totals against each other?Read the answer and worked solution →Run the monthly plan numbersRead the answer and worked solution →Split the plan into two columnsRead the answer and worked solution →

Worked practice questions

Pay arrives every two weeks. How is it converted into a monthly figure for a spending and saving plan?

  1. Multiply by 52 and then divide by 12
  2. Multiply by 12 and then divide by 26
  3. Multiply by 26 and then divide by 12
  4. Divide by 2 and then multiply by 12
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Correct answer: C. Multiply by 26 and then divide by 12

1. Converting to a monthly figure means finding the annual total first, then splitting it over the year. 2. Pay every two weeks arrives 26 times in a year. 3. So multiply the biweekly amount by 26 to get the annual amount. 4. Then divide that annual amount by 12 to get the monthly amount. 5. Multiplying by 52 treats the pay as weekly and doubles the annual total. 6. Multiplying by 12 and dividing by 26 inverts the two steps and shrinks the figure. 7. Dividing by 2 and multiplying by 12 treats two weeks as half a month, which ignores the extra pay periods. _Source: FDIC Money Smart for Adults (September 2018), Module 4: Your Spending and Saving Plan, section Table for Calculating Monthly Amounts_

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Using the envelope method, how is a weekly spending amount worked out from a monthly plan figure?

  1. Multiply by 52 and divide by 12
  2. Multiply by 4 and divide by 12
  3. Multiply by 12 and divide by 4
  4. Multiply by 12 and divide by 52
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Correct answer: D. Multiply by 12 and divide by 52

1. A plan figure covers one month, and an envelope covers one week. 2. Multiply the monthly amount by 12, the number of months in a year, to reach the annual amount. 3. Divide that annual amount by 52, the number of weeks in a year, to reach the weekly amount. 4. Dividing the monthly amount by four gives a quick estimate, but the exact route is times 12 then divided by 52. 5. Multiplying by 52 and dividing by 12 runs the conversion backwards, from weekly to monthly. 6. Multiplying by 12 and dividing by 4 leaves a quarterly figure, three times too large. _Source: FDIC Money Smart for Adults (September 2018), Module 4: Your Spending and Saving Plan, section Apply It: Using My Spending and Saving Plan_

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When money is short, what does prioritizing bills actually mean?

  1. Which bills to pay in full, in part, or late
  2. Which bills you are allowed to stop paying
  3. Which creditors you should avoid contacting
  4. Which bills to fold into a single new loan
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Correct answer: A. Which bills to pay in full, in part, or late

1. Prioritizing sets the order of payment, not the list of what is owed. 2. Each bill is assigned to be paid in full, paid partially, or paid late. 3. That choice is made by weighing what happens if the bill goes unpaid. 4. Nothing is written off, so no bill can simply be stopped. 5. Contacting creditors early is encouraged, because they may allow extra time to pay. _Source: FDIC Money Smart for Adults (September 2018), Module 4: Your Spending and Saving Plan, section Prioritizing Based on What Might Happen_

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