Dollars & Sense Ch. 2

Which of the following steps is the first foundation?

• Get out of debt
• save a $500 emergency fund
• build wealth and give
• pay cash for your car

Instead of borrowing money for large purchases, you should set money aside in a _______over time and pay with cash.

• emergency fund
• credit card fund
• sinking fund
• mortgage fund

What does it mean to have a negative savings rate?

• saving for things you want instead of need
• having a fully funded emergency fund
• having no savings at all
• spending more money than you make and acquiring debt

The saving habits of Ben and Arthur best illustrate which principle of saving?

• the length of time money is invested matters
• the amount of the initial investment is the key
• rate of return matters
• both a & c

The principle suggests that a certain amount of money today has a different buying power than the same amount of money in the future.  This is due to both the opportunity to earn interest on the money and because inflation will drive prices up, thereby changing the value of money.

• opportunity cost
• time value of money
• interest rate
• inflation

For which of the following should you save?

• purchases
• emergency fund
• wealth building
• all the above

Using the sinking fund approach, how much do you have to save each month to buy a $4,800 car a year from now?

• 400
• 300
• 275
• 500

At your age, a fully funded emergency fund should be?

• $500
• $5,500
• $100
• $1000

Which is not a key to saving money?

• focus
• making saving a habit and priority
• your income
• discpline

Which of the following is not a reason that people don't save money?

• The lack discipline
• they dont live on a budget
• they lack focus
• all the above