Foundations Savings Unit 3 Review

Front

What is a fully funded emergency fund?

Back

A fully funded emergency fund is typically three to six months' worth of living expenses saved to cover unexpected financial emergencies.

Front

How much should a fully funded emergency fund be at your age?

Back

$500, as a starting point for younger individuals.

Front

What is a sinking fund?

Back

A sinking fund is a savings strategy where money is set aside over time for a specific large purchase.

Front

What does a negative savings rate indicate?

Back

A negative savings rate indicates that an individual is spending more money than they earn, leading to debt accumulation.

Front

Which factor is not a key to saving money?

Back

Your income is not a key to saving money; rather, it is about how much you save and spend.

Front

What are the five steps to financial success?

Back

The five steps to financial success are known as the Five Foundations.

Front

What is the purpose of an emergency fund?

Back

The purpose of an emergency fund is to provide financial security and peace of mind in case of unexpected expenses.

Front

How can one build a sinking fund effectively?

Back

To build a sinking fund effectively, determine the total amount needed for the purchase, divide it by the number of months until the purchase, and save that amount each month.

Front

What is the importance of having a positive savings rate?

Back

Having a positive savings rate is important as it indicates that you are saving more than you spend, which helps in building wealth and financial security.

Front

What are some common reasons for having a negative savings rate?

Back

Common reasons for a negative savings rate include high living expenses, lack of budgeting, and impulsive spending.