Forbes Fictional List #1

This program will take about 10 minutes to complete.

NOTE: Financial education content for the program was taken from Cash Course, an interactive financial education program created by The National Endowment for Financial Education ® (NEFE ®) - an independent, nonprofit foundation committed to educating Americans on a broad range of financial topics and empowering them to make positive and sound decisions to reach their financial goals.

"Forbes Fictional 15" article was published in 2011 at forbes.com.

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Duck

Question 1 of 5

#1 on Forbes Fictional 15: Scrooge McDuck

Fortune: $44.1 B
Source: Mining, Treasure Hunting
Residence: Duckburg, U.S.

Penny-pinching poultry keeps majority of his fortune in gold coins stored in massive "money bin" high in the hills above Duckburg. Famously frugal: Once fought a bear over a $2 jar of honey and still has the first dime he ever earned. Featured in Disney's Uncle Scrooge comic books and cartoons.

Question: Scrooge McDuck didn’t have a problem with overspending, like many of us do. What do experts say is the main reason people overspend?

Buying in bulk
Distracted by in-store music
Paying with credit cards

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Piggy

ANSWER: Paying with credit cards


LESSON FOR YOUR LIFE: Preventing Overspending

Whenever we spend more than our income, we are overspending. For some of us, overspending can be almost unconscious — we're not even aware of the hole we've dug ourselves into until it's too late. But in order to meet our financial goals, we need to live within our means.

Following are five common reasons people overspend. If you recognize any of these, see if you can weed that behavior out of your financial life.

  1. Peer pressure - Many students feel pressured by friends to spend money they don’t have - grab dinner, see a movie, or buy tickets for a concert. If you can be honest and live within your means, you'll not only prevent yourself from financial troubles, but you also may find that you've helped others make better financial choices for themselves.
  2. Want to feel good NOW - Your life is full of stress, obligations, demands. Sometimes you want a reward, so you buy some new clothes or a new video game. You might feel better for a while — until you get the bill. Not having money when the bill comes is an even bigger stressor and the cycle starts again. Find other ways to reward yourself - time with friends, spending time on a hobby, watching your favorite TV show, etc.
  3. Don't have, or ignore, financial goals - If you've never set financial goals for yourself, you may not have considered the importance of saving or investing for tomorrow. You may find it easy to spend money now, even though every spending decision you make today will affect the quality of your future.
  4. Keep up with neighbors and friends - We often think we should be able to have everything our friends have, but many times we can't. Some will always have more than others. Many new technologies get cheaper with time, and many new styles pass quickly. While we all need rewards once in a while, you'll find a lot more joy in buying what you can afford rather than stressing about your upcoming credit card bill.
  5. Don’t have a budget – If you don’t use a budget, you probably don't have any idea where your money's going or even how much money you have to spend. Keep your spending in check by listing your income and your expenses. This will help you determine if you are spending more on your wants, like eating out, than your needs.

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Cullen

Question 2 of 5

#2 on Forbes Fictional 15: Carlisle Cullen

$36.2 B
Source: Compound Interest, Investments
Residence: Forks, Wash.

Immortal vampire, small town doctor and value investor said to be a huge fan of getrichslowly.org, a penny-pinching personal finance blog that extols the extraordinary power of compound interest. It's worked for Cullen: The 370-year-old amassed one of the largest fictional fortunes simply by banking a small amount of capital in 1670, and letting the interest accrue. Featured in Stephenie Meyer's Twilight novels and films.

Question: Carlisle made good investing decisions - investing in companies with the potential for long-term success. Which investing guru offers this advice,
"In the end, what counts in investing is what you pay for a business -- through the purchase of a small piece of it in the stock market -- and what that business earns in the succeeding decade or two. Avoid businesses whose futures you can't evaluate, no matter how exciting their products may be."

Dave Ramsey
Warren Buffett
Donald Trump

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Piggy

ANSWER: Warren Buffett


LESSON FOR YOUR LIFE: Power of Compound Interest

If you start saving early in life, you’ll have an advantage over those who start later. That's because when you put away even small amounts early, a very important financial concept is working for you: compounding interest.

When you put money away in savings or investments, the initial amount you save or invest is the principal. The principal earns interest, which then is added to the original principal. This amount (principal + interest) again earns interest, and so on. This process is called “compounding,” and its effect is like magic when you let it work for you over time.

Here is a dramatic example of why it pays to start saving and investing early:

Alletta starts investing $1,000 a year at the age of 22 in a tax-deferred Individual Retirement Account (IRA). Tax-deferred means the earnings and the principal aren't taxed until the money is withdrawn, usually years later. Alletta stops putting money in the IRA after 10 years, at age 32, but leaves her money so it will grow through compounding until she reaches retirement age.

Her twin brother, Cory, doesn't start investing $1,000 until age 30. But once he starts, he invests $1,000 in his IRA every year for 35 years, until he reaches retirement age at 65. Alletta and Cory both earn 9 percent annually on their IRAs.

When Alletta is 65, she will have $310,148. When Cory is 65, he will have $215,711.

Diversifying Your Investments

Having a diverse portfolio means you have your investments or savings in more than one area. It’s good to have investments in low-risk, medium-risk, and higher-risk investments, as well as in different asset categories (stocks, bonds, mutual funds, CDs, and savings accounts) and in different industries. In addition, if you have several mutual funds, each fund should invest in a different market sector.

Mutual Funds

When you invest in a mutual fund, the fund uses your money and money from other investors to buy shares of stocks or bonds in several different companies. A mutual fund may focus on a certain market sector, such as biotechnology stocks, or it may focus on investments with certain anticipated returns.

Because you can choose from a diverse selection of mutual funds, these are usually good choices to invest in for your long-term goals such as retirement. Another benefit of investing in a mutual fund is that portfolio managers oversee the fund and the choices of investments within it, sparing you the time to research individual companies you may want to invest in.

Stocks and Bonds

When you buy stock in a company, you become a part owner of that company. If the company does well, you make money because the value of the stock increases. You also may receive part of the company's profit in the form of a dividend. A dividend is the sum of money paid to shareholders of a corporation out of earnings. The risk of stocks is that there is no guarantee that they will increase in value.

When corporations, the U.S. treasury, or municipal governments need to raise money, they often issue bonds. The bond states the amount of the loan, the interest to be paid, how often the interest will be paid, and how long it will take to repay (usually 1 to 30 years). When you buy a bond, you are essentially loaning the corporation or government money. In addition to earning a usually favorable interest rate, you may have tax advantages when you buy certain bonds, meaning you won't be taxed on the interest you earn from the bond.

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Jed

Question 3 of 5

#5 on Forbes Fictional 15: Jed Clampett

$9.5 B
Source: Oil & Gas
Residence: Beverly Hills, Calif.

The mountaineer magnate discovered "black gold" while hunting on his homestead, and turned it into an international energy giant. Clampett Oil went public in 1984, but the Clampett clan still runs the show: Chief executive Jed assisted by CFO "Granny" Daisy May Moses; environmental health and safety run by cousin Jethro Bodine. Featured in The Beverly Hillbillies television series and films.

Question: Money and family are usually related. The Clampett’s work well together, but what famous business family siblings both admit their father holds them to high standards and have said they believe they could be fired if they don’t perform?

Don Jr. & Ivanka Trump of the Trump fortune
James & Lachlan Murdoch of the Murdoch fortune
Rob & Alice Walton of the Walmart fortune

Next

Piggy

ANSWER: Don Jr. & Ivanka Trump


LESSON FOR YOUR LIFE: Relationships & Money

Involving Your Parents in Your College Plan

Paying for college is sort of like making a business deal with your parents. Learning the “terms” of their offer—how much they are planning to pay-will help you establish a plan for paying for college. Once you know how much of the costs will be your responsibility, you’ll have a better idea of the time, effort, and resourcefulness that will be required on your end.

Say, for example, that your parents offer to pay 40 percent of your first-year costs. They've asked you to be responsible for the remaining 60 percent. You now have a starting point from which to plan the following:

  • Scholarships: How much of your share of the costs can you cover with scholarships you have a chance of winning?
  • Loans: What type of loan program should you explore to cover 60 percent of the first-year costs for your target school?
  • Employment: Will you need to work part time to pay your share?
  • Debt: At the 60 percent funding level over four years, how heavily will you be burdened by debt after graduation?

Define "Emergency"

Some days a latte or a pizza feels like an emergency. Make sure you and your parents both understand what constitutes an actual emergency. They may be willing to pay for emergency costs directly related to school and your health while drawing the line at paying for clothing, car repairs and spring break trips.

Financial educators and planners always recommend that you set aside money in an emergency fund. Generally, you should set aside at least 3 months living expenses in your emergency fund.

Seek Your Parent's Advice

As a college student, you're technically on your own in the world-and there may be times when you find yourself in financial trouble. Seeking your parents' experienced point of view can be a great help.

You and your parents both need to understand that you are in a transitional period. You're moving from dependence to independence. That's why asking for advice-rather than money-is important. Your folks may want you to realize that their advice in emergency situations is as valuable, if not more valuable, than simply sending money to you, no questions asked.

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Stark

Question 4 of 5

#6 on Forbes Fictional 15: Tony Stark

$9.4 B
Source: Defense
Residence: Malibu, Calif.

An engineering genius who earned two master's degrees by age 19, Stark's remarkable inventions are often outshined by his ability to create controversy. In the last year he's refused an order from the U.S. Senate to surrender the Iron Man technology to the government, been attacked by an armored madman while racing his Formula One car on the Circuit de Monaco, and temporarily appointed personal assistant Pepper Potts to CEO of Stark Industries. Featured in the Iron Man comic books and films.

Question: Tony is successful because he was able to great a good education. Most students need to take out student loans in order to pay for college. These loans are considered "good debt" because your education will create value in your life. What is the average student loan of UNL students?

$22,000
$20,000
$33,000

Next

Piggy

ANSWER: $20,000


LESSON FOR YOUR LIFE: Creating a Plan to Repay Your Student Loans

The first step in creating a plan to repay your student loans is creating a personalized budget. You need to assess how much money you have to put towards loan payments. After you figure your payment amount, you can choose your repayment plan.

Standard Repayment
With the Standard Plan, you’ll pay a fixed amount each month until your loans are paid in full. You'll have up to 10 years to repay your loans. This plan is good if you can handle higher monthly payments because you'll repay your loans more quickly. Your monthly payment under the Standard Plan may be higher than it would be under the other plans, but you generally pay the least interest in the end.

Extended Repayment
Under the Extended Plan, you'll still have minimum monthly payments, but you may take up to 25 years to repay your loans. The length of your repayment period will depend on the total amount you owe when your loans go into repayment, but you must have a minimum borrowed amount of $30,000 to qualify for this program. Remember that the longer your loans are in repayment, the more interest you will pay.

Graduated Repayment
With this plan, your payments start out low, then increase, generally every two years. The length of your repayment period will depend on the total amount you owe when your loans go into repayment. If you expect your income to increase steadily over time, this plan may be right for you.

Income Based Repayment (IBR)
Income Based Repayment is a new repayment plan under which required monthly payment is capped at an amount that is intended to be affordable based on income and family size. You are eligible for IBR if the monthly repayment amount under this plan will be less than your monthly payment calculated under the standard repayment plan. Under IBR, if you repay with this plan for 25 years and meet other requirements you will have any remaining balance of your loan(s) cancelled.

Income Contingent Repayment (ICR)
This plan is for Direct Loan borrowers only. Each year, your monthly payments will be calculated on the basis of your Adjusted Gross Income (AGI), family size, and the total amount of your Direct Loans. To participate in the ICR Plan, you must sign a form that permits the Internal Revenue Service to provide information about your income to the U.S. Department of Education.

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Batman

Question 5 of 5

#8 on Forbes Fictional 15:
Bruce Wayne

$7.0 B
Source: Inheritance, Defense
Residence: Gotham City

Police were ready to declare Gotham's most eligible bachelor dead after he disappeared from the social scene in 2009. But the billionaire playboy suddenly reappeared last fall -literally crashing the gates of rapper Sean Combs's annual "White Party" in a Ferrari Enzo. Shares of Wayne Enterprises stock are up significantly year over year, thanks to the leadership of CEO Lucius Fox, and a new project to franchise security outfits around the globe. Featured in the Batman comic books and films.

Question: Bruce Wayne excels at starting businesses. If you are looking to start your own business, what's the average amount of money you'd need?

$126,000
$55,000
$31,150

Next

Piggy

ANSWER: $31,150


LESSON FOR YOUR LIFE: Creating a Financial Plan

If you want to start a business, retire early, or buy a home, you must plan for how you will succeed!

You can get started planning by using an expense worksheet. This helps you begin focusing in a structured way on how to use your money to begin achieving your goals immediately after graduation. If you think of your goals as your destination, an expense worksheet helps you identify and set aside the money you need to pay for your trip.

When planning more than a few years out into the future, use ballpark numbers. Your income and financial responsibilities will change over time. Do yourself a favor, though, and begin to gather more information now so you can gradually begin to form some safe assumptions and develop some realistic numbers for your medium- and long-term goals. Initiating the learning process now will pay off later.

Defining Financial Goals

Depending on the time frame it takes to reach one of your goals, it can be considered a short-term, medium-term, or long-term goal.

  1. Short-term goals are those that can be achieved in three months or less. As an example of this, you might want to save $100 to buy an iPod in three months.
  2. Medium-term goals are those that will take between three months and one year to achieve. For example, you might like to save for six months to take a trip during your spring break.
  3. Long-term goals take more than one year to accomplish. One of your long-term goals for after graduation could be to pay off your student loans early by paying an extra $200 per month.

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FINAL RESULTS

0-2 Correct

Learn more about financial success by scheduling a money management advising appointment at the UNL Student Money Management Center.

FINAL RESULTS

3-4 Correct

Learn more about financial success by scheduling a money management advising appointment at the UNL Student Money Management Center.

FINAL RESULTS

5 Correct

Learn more about financial success by scheduling a money management advising appointment at the UNL Student Money Management Center.