Review Chapter 5

One reason people should save money is to create an "emergency fund." Which of these is an example of an unexpected expense you might use an emergency fund to pay for?

• 6 months of cable TV

• Valentine's Day gifts for friends and family

• A new cell phone if yours is stolen on the bus

What does it mean to "pay yourself first"?

• On payday, take some money out to reward yourself with some fun spending

• Any time you get paid, set aside some portion to save before you do any spending

• Spend money on yourself first, then your immediate family, then friends or other relatives

TJ typically cuts 5 lawns per month and earns $20 per lawn. He spends money throughout the month on things like snacks, tickets to high school football and basketball games, and new video games. Somehow, he ends every month with only a few dollars left. Which behavior change is MOST likely to help TJ save more money?

• Spend less time cutting grass and more time saving money

• Before he spends, set aside $5 to save out of every $20 payment

• Ask his parents for an allowance and try to save that money instead

• Spend money on a better lawn mower so he can cut more grass

Ro's school offers an overnight trip to Washington DC for all 9th grade US history students. Even though the trip is 20 months in the future, she knows she wants to attend and that she should start saving now. If the trip costs $500 total, how much does she need to save per month to have enough?

• $20 per month

• $25 per month

• $480 per month

• $10,000 per month

What is one BENEFIT of using a savings account instead of a checking account?

• Your savings account will charge lower ATM fees than your checking account

• Your savings account will earn interest, so the money in your account will grow without you doing anything

• Your savings account lets you write checks or pay bills easily, while it's more difficult to use your checking account

• Your savings account allows you to use online banking, while checking accounts require you to visit the bank branch