Saving Accounts

A savings account should be used for daily purchases.

• True

• False

Compound interest is best defined as

• Earning interest only on the principal

• Earning any form of interest

• Earning interest on interest

• All of the above

About how much should you save in an emergency fund?

• 1-3 months of living expenses
• 3-6 months of living expenses
• 6-9 months of living expenses
• 9-12 months of living expenses

Which is FALSE about saving and investing? (Select all that apply.)

• Saving doesn't outpace inflation; investing usually does.

• Both saving and investing generally have low returns.

• Saving is for short-term; investing is for the long-term.

• Saving has more risk; investing has less risk.

How is compound interest different than simple interest?

• It is the interest earned minus the amount earned on that interest.

• It is double the simple interest earned on an investment.

• It is the interest earned plus the amount earned on that interest.

• It's not different; they are the same.

What is a good strategy to help you save?

• 1st, spend money on all expenses; put the rest into saving
• Tap into your savings on a regular basis to make small purchases

• Pay yourself first - set aside money for savings each month
• Keep your spending and saving money together in one account

What is your ability to resist the allure of an instant reward and hold out for a potentially greater reward in the future?

• Opportunity cost

• Delayed gratification

• Instant gratification

• Inflation

Which of the following causes of instant gratification is buying a "want" to fulfill a "need"?

• Anticipation

• Replacement

• Need

• Desire

Which of the following causes of instant gratification is described as making a purchase after seeing an advertisement?

• Desire

• Uncertainty

• Replacement

• Anticipation

A strategy to fulfill instant gratification is to stop and think before making a purchase.

• True

• False