The Ultimate Financial Planning Calculator Quiz

By: Staff

4 Min Quiz

Image: refer to hsw

About This Quiz

Proper financial planning confuses many people, which explains the increase in free online financial planning calculators. How accurate and useful are these tools, however? Find out whether you know enough about financial planning calculators by taking this quiz.

What is a financial planning calculator?

These increasingly common calculators combine the financial data you input with the goals you say you would like to reach and return a financial plan to help you reach those goals.

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What is a problem with a number of financial planning calculators?

If a calculator of this sort lacks transparency, it is hard to know if the calculator you are using is accurate or flawed.

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What is a common problem with financial planning calculators that are soundly programmed and are clear about their sources of predictions?

Greater accuracy requires more and more complicated user data inputs. This means that there is a greater chance that whoever is inputting the financial data will make a mistake.

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What might you learn about a credit card using a free online financial planning calculator?

Sometimes, despite paying an annual fee, you might be able to save money over a card without an annual fee. Interest rates, for example, differ from card to card.

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What information can a free online financial planning calculator tell you about your cash savings?

Many people think of savings as an isolated number, but to plan your finances properly you need to think about them in the context of the inflation rate.

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What can a free online financial planning calculator tell you about borrowing for college?

Sometimes people think that any student loan is worth it, but you must remember that you will still have to pay those loans back down the road.

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What is a flaw of even the best financial planning calculators?

Even the most up-to-date and detailed financial planning calculators are still based on assumptions about future events. If something unexpected happens and those predictions turn out to be far from accurate, the results could prove to be problematic.

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What is an example of a hypothetical that a financial planning calculator might easily get wrong?

Various external factors affect things, such as life expectancy and inflation. Thus, the predictions these financial planning calculators use could easily be way off target.

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What is the best use for a free online financial planning calculator?

These programs are far from worthless, but they are definitely flawed. They can, however, help you get a good idea of what you need to consider if you have no clue as to where to start.

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If you don't consult a financial planning professional after using a free online financial planning calculator, what is the least you should do?

Especially since these programs are free, take the time to use a number of them. If the results are similar, you can assume there is a greater chance that the plan is fairly sound.

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