Chapter 2 - Savings

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

• $5,000

• $500

• $1,000

• $100

Which of the following is not one of the three basic reasons for saving money?

• Build wealth

• Emergency fund

• Have money available to lend to friends

• Large purchases

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

• Mortgage fund

• Emergency fund

• Sinking fund

• Credit card fund

Saving is about:

• Contentment and earning more money

• Pride and greed

• Contentment and emotion

• Making more money and discipline

For which of the following should you save?

• Purchases

• Wealth building

• Emergency fund

• All of the above

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

• $500

• $400

• $275

• $300

Which of these is not a key to saving money?

• Focus

• Discipline

• Your income

• Making saving a habit and a priority

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 and C

Which of the following is not a reason your emergency fund should be kept in a separate savings account away from your spending money?

• So that it is not too easy to access.

• So that your emergency fund savings can earn a lot of interest

• So that it is clear what money is only to be used for emergencies

• So that you do not get your spending and saving money confused

Which of the following steps is the First Foundation?

• Get out of debt

• Pay cash for your car

• Build wealth and give

• Save a $500 emergency fund