Foundations Review 2019 Spring Part 2

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

• Emergency fund

• Sinking fund

• Credit card fund

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

• The amount of the initial investment is the key.

• None of these

• Rate of return doesn’t matter.

• The length of time money is invested matters.

You should save money for three basic reasons: emergency fund, purchases, and wealth building.

• True

• False

Interest paid on interest previously earned

• Compound interest

• Interest

Why is having a fully funded emergency fund so important when it comes to your financial well-being?

• As long as you have a good-paying job, you really donʹt need an emergency fund.

• As long as you have a good-paying job, you really donʹt need an emergency fund.

• The purpose of an emergency fund is to set money aside for unexpected financial emergencies and to provide a sense of financial security.

• None of these

For which of the following should you save?

• Wealth building

• Emergency fund

• All of these

• Purchases

You should keep your emergency fund in the same account as your spending money.

• True

• False

Which of the following is a reason that people donʹt save money?

• They lack discipline

• They lack focus

• They do not live on a budget

• All of these

A written cash flow plan.

• Budget

• Personal finance

If you write a zero-based budget every month, it is not necessary to reconcile your account.

• True

• False