Question 2: Personal Finance
Elena's paycheck and employer benefits
- Units 3, 4 and 5
- 3 points
- About 13 minutes
You can use a calculator on this question, just like on exam day.
A short scenario about a person's or household's money, with numbers and goals: you read the data (for example, total assets versus total liabilities), describe a challenge or opportunity, and explain an action that would help them reach a goal. On the exam: Question 2 of 4, Section IIB (Questions 2–4 share 65 minutes); suggested time 12–13 minutes, 5% of the score. Assesses Skill Categories 1 and 3. Section II has 4 free-response questions in 90 minutes (40% of the score). The exam is fully digital in Bluebook, and only a 4-function calculator is allowed (handheld or the built-in Desmos 4-function calculator).
The question and its sources
Respond to parts A, B, and C. Elena has come to you, a financial advisor, for guidance.
Elena's situation
Elena, 22, is a pharmacy technician paid $21 an hour. The pharmacy schedules her for 28 to 40 hours a week depending on how busy it is, so her pay changes from one paycheck to the next. She is paid every two weeks.
Elena has $600 in savings. Her goals are to build an emergency fund of $3,000 and to start saving for retirement.
Her employer offers a retirement savings plan. For every dollar Elena contributes, up to 4% of her gross pay, the employer adds a matching dollar. Elena isn't contributing yet.
Table 1 shows her most recent pay stub.
Source: Hypothetical person and figures written for this practice question
Table 1. Elena's pay stub for one two-week pay period (example amounts)
| Item | Amount |
|---|---|
| Hours worked | 70 |
| Gross pay (70 hours × $21) | $1,470.00 |
| Health insurance premium (taken out before taxes) | $38.00 |
| Federal income tax withheld | $96.00 |
| Social Security tax | $88.78 |
| Medicare tax | $20.76 |
| State income tax withheld | $41.00 |
| Retirement plan contribution | $0.00 |
Source: Hypothetical pay stub written for this practice question; actual withholding depends on the employee's tax forms, benefits and state
Suggested time: 13 minutes
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Part (A)
1 pointUsing data from the scenario, calculate Elena's net pay for this pay period. Show your work.
0 / 2,500 characters
Part (B)
1 pointDescribe one financial challenge or opportunity in the scenario that is affecting Elena's ability to achieve her financial goals right now.
0 / 2,500 characters
Part (C)
1 pointExplain how one specific step Elena could take would help her achieve one of her financial goals.
0 / 2,500 characters
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