Chapter 2/3 Quiz - Saving and Budgeting

A monthly plan for how you are going to save and spend your income.

• Budget
• Net Worth
• Expense
• The Five Foundations

Which of the following steps is the First Foundation?

• Get out of Debt

• Build wealth and give

• Save a $500 emergency fund

• Pay cash for your car

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

• mortgage fund

For which of the following should you save?

• Purchase

• 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 $4800 car one year from now?

• $400

• $300

• $275

• $500

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

• Emergency fund

• Large purchases

• have money available to lend to friends

• build wealth

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 you do not get your spending and saving money confused.

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

• so that is is not too easy to access.

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

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

• As long as you have a good-paying job, you really don't 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.

• The purpose of an emergency fund is to have money set aside for large purchases, like vacations.

• none of the above.

Your income level greatly affects your saving habits.

• True

• False

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

• True

• False