Unit 4(3) Review

Front

What is the recommended amount to have saved in an emergency fund?

Back

3-6 months of expenses.

Front

How do interest rates for savings accounts relate to inflation?

Back

Savings accounts earn a negative real return because interest rates are lower than inflation.

Front

What is the common financial status of the majority of Americans regarding emergency funds and retirement savings?

Back

The majority do NOT have an adequate emergency fund and do NOT have enough saved for retirement.

Front

What are 529 plans used for?

Back

529 plans can be used for education expenses.

Front

What can Health Savings Accounts (HSAs) be used for?

Back

HSAs can be used for health expenses.

Front

What is a disadvantage of saving for retirement in a traditional savings account?

Back

Savings accounts earn very little interest, and your growth may not keep pace with inflation.

Front

What is the purpose of an emergency fund?

Back

To cover unexpected expenses and provide financial security.

Front

What is the difference between a 529 plan and an HSA?

Back

A 529 plan is for education expenses, while an HSA is for health expenses.

Front

What is a negative real return?

Back

When the interest earned on savings is less than the rate of inflation, resulting in a decrease in purchasing power.

Front

Why is it important to have an adequate emergency fund?

Back

To avoid financial stress and debt during unexpected financial challenges.