Check-In #7- Why We Save

According to experts, your emergency fund should include enough money to cover your expenses for…

• 3 to 6 days

• 3 to 6 weeks

• 3 to 6 months

• 3 to 6 years

Which of the following is a good reason to start saving for retirement in your early 20s?

• You'll benefit substantially from compounding interest over all those years

• You might have student loan debt to pay off as well

• Banks typically offer young people higher interest rates, so you'll earn more interest

• Banks typically offer young people lower interest rates, so you'll pay less in interest

Which of the following statements is TRUE?

• Most students that start saving as a high school freshman will likely have enough saved by graduation in order to pay all of their college tuition.

• Most students that start saving as a high school freshman will likely still have to borrow money in order to pay all of their college tuition.

• Starting saving as a high school freshman will prevent you from receiving financial aid in the future.

• Starting saving as a high school freshman will help you get into the school of your choice.

Jasmine is 27 and wants to make sure she'll have enough money to retire when she's 67. Which strategy will BEST help her meet that goal?

• Save $100 per month in her savings account for the next 40 years

• Enjoy a carefree life now -- travel, buy nice things -- and then start saving a lot when she turns 40

• Invest automatically, every month, in mutual or index funds, and let the money grow for decades

• Invest $100 per month, for the next 10 years, in a high risk/high return stock, and she should have enough already to retire by age 37

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Which of these is a specialized account used exclusively for saving money for future health expenses?

• 401(k)

• 529

• IRA

• HSA

Which of the following is an example of "Keeping up with the Joneses?"

• Applying to the top colleges, to see if you'll get accepted to any of them

• Saving for retirement as soon as you graduate college, to take advantage of compounding interest

• Buying a new car, instead of a used vehicle, so that friends and neighbors won't think you're poor

• Buying your mother a gift because you want her to know that you appreciate her

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Which of these is NOT a known reason that people impulse shop?

• A sense that the product will make your life substantially better

• Strategic pricing and ads that lead you to believe that if you buy now, you'll save overall

• A concern about inflation and its impact on the future cost of goods

• The fear of missing out on a great deal

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Why is it dangerous to live paycheck-to-paycheck?

• If you lose your job you will have no way to pay bills

• If your pay increases, you will have to redo your entire budget

• Low-income people often live paycheck-to-paycheck

• You will never be able to afford nice things

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Margot is currently a high school junior and wants to be able to pay for all of next year's prom and senior trip herself, using the money from her part-time job, where she gets paid twice per month. What would be a good savings plan for Margot?

• Put as much money as possible into a 401(k) so that it can earn interest

• Spend normally until the beginning of next school year, and then start saving every penny for senior year

• Calculate how much money she’ll need to save out of each paycheck, and then create a budget that allows her to save the necessary amount

• Take on a second job so she doesn’t need to worry about saving

Finish the following sentence. Research has shown that the more money you…

• Spend, the sadder you feel

• Spend, the happier you feel

• Save, the sadder you feel

• Save, the happier you feel

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