Personal Finance Chapter 3: Saving Money

What is the first thing you should save for?

• Pay off debt

• Emergency fund

• Large purchases

• Retirement

What is the second thing you should save for?

• Pay off debt

• Emergency fund

• Large purchases

• Retirement

Dave suggests you keep your emergency fund here.

• Checking account

• In a home safe for easy access

• Invested in stocks to earn money

• Savings account

Which is true about saving?

• How much you save should be determined by what you have left after you are done spending.

• People save more when their incomes are higher.

• Saving should be a priority.

• All of the above

What is the sinking fund approach?

• Buying with credit instead of cash and sinking further into debt

• Saving up and paying cash for a large purchase

• Sinking funds into different investment accounts

• Paying for a large purchase with a combination of cash and credit

Which is most true about making a one-time investment and letting it sit for 30 years?

• The interest rate doesn't matter as long as you don't make any withdrawals.

• It is foolish to only make a one-time investment.

• The interest rate does matter when making a one-time investment.

• All of the above are true.

Which is the best way to get into the habit of saving money?

• Set up pre-authorized checking withdrawals.

• Set a reminder on your phone.

• Avoid spending money on eating out.

• Have your parents remind you on a regular basis.

This is the term for the money that the bank pays into your savings account.

• Principal

• Interest

• Deposit

• Direct deposit

This is the term for the amount that you deposit into your account.

• Deposit amount

• Principal

• Interest

• Account balance

This is interest paid on principal only

• Dividends

• Simple interest

• Compound interest

• Principal interest