AFC Cheat Sheet 2026

The 30 highest-yield AFC facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. A client has employer life insurance at 2x salary ($160,000 on $80,000 income) with a non-working spouse and three children. Is this adequate? → No, the recommendation is 10-12 times income for this family situation
2. A client has $50,000 in savings earning 1% while inflation is 3.5%. What concept should the counselor explain? → Nominal versus real interest rate
3. A 60-year-old is evaluating long-term care insurance. What factor most significantly impacts premium cost? → Age at time of purchase
4. Which type of account is BEST suited for holding an emergency fund? → High-yield savings account
5. What is risk pooling in insurance? → Gathering premiums to cover collective risks
6. What is a target-date fund? → A fund that adjusts risk based on retirement date
7. A client contributes $3,000 to a traditional IRA and is in the 22% tax bracket. What is the maximum immediate tax savings from this deductible contribution? → $660
8. What does the term 'amortization' refer to in the context of a mortgage? → The gradual repayment of a loan through scheduled principal and interest payments
9. A client requests that the financial counselor not document certain assets in their file because they are going through a divorce. What should the counselor do? → Explain that accurate documentation is required and declining could mean ending services
10. A homeowner's effective housing cost ratio compares: → Total housing costs (PITI + HOA) to gross monthly income
11. Which of the following describes the 'above-the-line' deductions on a federal tax return? → Deductions subtracted from gross income to arrive at AGI
12. What is the purpose of Required Minimum Distributions from Traditional retirement accounts? → To collect income taxes on previously tax-deferred contributions and earnings
13. Which strategy is most effective for managing debt? → Debt snowball method
14. What is the standard deduction for a married couple filing jointly for tax year 2024? → $29,200
15. A client wants to ensure their adult child with special needs receives an inheritance without losing government benefits. What should the counselor recommend? → Establish a special needs trust (supplemental needs trust)
16. What is the annual gift tax exclusion and how is it used in estate planning? → $18,000 per person per year, allowing tax-free wealth transfer
17. What is an emergency fund? → A savings buffer for unexpected expenses
18. A client asks about the 'Rule of 72.' This rule estimates: → The number of years to double an investment at a given rate of return
19. What is asset allocation? → Spreading investments across different asset classes
20. Which federal law protects consumers from abusive debt collection practices, including limits on when and how collectors can contact them? → Fair Debt Collection Practices Act
21. Which of the following best describes tax-loss harvesting? → Selling investments at a loss to offset capital gains
22. Under the Fair Debt Collection Practices Act (FDCPA), which of the following actions by a third-party debt collector is permissible? → Calling the debtor's neighbor to ask for the debtor's address.
23. A client has been making consistent progress for six months. What is the appropriate counseling action? → Review progress, celebrate achievements, and gradually transition toward self-management
24. How does compound interest benefit retirement savings? → By earning interest on both principal and interest
25. Which of the following best describes 'sinking funds' as used in personal financial counseling? → Dedicated savings set aside regularly for known, anticipated future expenses
26. Which credit scoring factor has the greatest weight in the FICO scoring model? → Payment history
27. A client has $3,500 in monthly living expenses. What is the MINIMUM emergency fund balance a financial counselor would typically recommend? → $10,500
28. Title insurance protects against: → Defects or disputes in the property's ownership history that existed prior to purchase
29. What is the primary ethical concern with a financial counselor also selling insurance products to their counseling clients? → It creates a dual relationship with inherent conflict of interest
30. A SMART financial goal must be Specific, Measurable, Achievable, Relevant, and: → Time-bound