26/05/2025
FINANCIAL LITERACY QUESTIONS AND ANSWERS!!!
1. WHAT IS FINANCIAL FREEDOM?
Answer: Financial freedom is the state of having enough income to cover living expenses without relying on a traditional job, enabling you to make choices based on your desires rather than financial constraints.
2. HOW DOES ONE ACHIEVE FINANCIAL INDEPENDENCE?
Answer: Financial independence is achieved when your assets or investments generate enough income to cover your expenses, allowing you to live without relying on active employment.
3. WHAT IS A FINANCIAL GOAL?
Answer: A financial goal is a specific, measurable objective that an individual or business sets for managing their finances, such as saving for retirement, paying off debt, or buying a home.
4. WHAT IS FINANCIAL SECURITY?
Answer: Financial security is the peace of mind that comes from having enough money to meet current and future financial needs without fear of running out of money.
5. HOW DOES DEBT IMPACT FINANCIAL FREEDOM?
Answer: Debt can limit your ability to achieve financial freedom by tying up your income in interest payments, reducing savings potential, and hindering investment opportunities.
6. WHAT IS THE ROLE OF SAVINGS IN FINANCIAL INDEPENDENCE?
Answer: Savings provide a cushion of funds to cover emergencies, investments, and future goals, which are crucial for achieving financial independence by reducing reliance on earned income.
7. WHAT IS A NET WORTH?
Answer: Net worth is the difference between your assets (things you own) and liabilities (debts you owe). A positive net worth is essential for financial security.
8. WHAT IS THE 50/30/20 BUDGETING RULE?
Answer: The 50/30/20 rule is a budgeting method where 50% of income goes to needs, 30% to wants, and 20% to savings or debt repayment, helping individuals achieve financial freedom.
9. WHAT IS A PASSIVE INCOME?
Answer: Passive income is money earned with minimal ongoing effort, such as rental income, dividends, royalties, or earnings from investments.
10. HOW CAN INVESTING HELP ACHIEVE FINANCIAL INDEPENDENCE?
Answer: Investing in assets like stocks, bonds, or real estate helps grow wealth over time through compound returns