Personal Finance Chapter 2

Which of the following steps is the First Foundation?

• Get out of debt

• Build wealth and give

• Save $500 emergency fund

• Pay cash for your car

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

As a young adult, a fully funded emergency fund should be:

• $500

• $5000

• $100

• $1000

Why should interest earned not be a factor with your emergency fund?

• Inflation can eat up the interest earned

• Interest-bearing accounts at banks earn a high rate of interest, therefore, interest is not a concern

• The emergency fund is not intended to grow wealth

• None of the above.

Savings is about:

• Contentment and emotion

• Making more money and discipline

• Contentment and earning more money

• Pride and greed

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

• Emergency fund

• Sinking fund

• Credit card fund

• Mortgage fund

What does it mean to have a negative savings rate?

• Saving for something that is want instead of a need

• Having a fully funded emergency fund

• Having no savings at all

• Spending more money than you make and acquiring debt.

For which of the following should you save?

• Purchases

• Emergency fund

• Wealth building

• All of the above

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

• They lack discipline

• They lack focus

• They do not live on a budget

• All of the above

Which of these is not a key to saving money?

• Focus

• Making saving a habit and priority

• Your income

• Discipline