Dave Ramsey Basic Knowledge

Front

Your income determines your wealth.

Back

False - Wealth is determined by assets and liabilities, not just income.

Front

Prior to the 1970’s, debt was something most Americans were ashamed of.

Back

True - Debt was often viewed negatively before the 1970s.

Front

What is the benefit of diversification in your investments?

Back

Reduced risk - Diversification helps to spread risk across different investments.

Front

What primarily causes the widespread financial insecurity of Americans?

Back

Americans don't save and they spend more than they make.

Front

What type of investment would a young investor willing to take moderate risk for above-average growth be most interested in?

Back

Mutual funds - They offer a balance of risk and potential growth.

Front

Define 'debt'.

Back

Debt is an amount of money borrowed by one party from another.

Front

What is 'financial literacy'?

Back

Financial literacy is the ability to understand and effectively use various financial skills.

Front

Explain the concept of 'budgeting'.

Back

Budgeting is the process of creating a plan to spend your money.

Front

What does 'interest' mean in finance?

Back

Interest is the cost of borrowing money, usually expressed as a percentage.

Front

Define 'savings'.

Back

Savings is the portion of income not spent on current expenditures.