Saving Quiz

TJ is in 7th grade right now and cuts grass for neighbors to earn money. He wants to set one short-term savings goal and one long-term savings goal. Which answer best matches those goals?

• Short-term = expensive new sneakers // long-term = a car

• Short-term = birthday present for his mom // long-term = a trip to the movies

• Short-term = a car // long-term = a nicer car

• Short-term = a pack of gum // long-term = 3 packs of gum

Which statement best describes what it means if your bank is "FDIC insured?"

• If a bank customer gets hurt while inside the bank, the customer can sue the bank and their FDIC insurance will cover the costs

• If you have money in your checking or savings account and the bank goes out of business, you are guaranteed to get your money back up to a certain limit

• Bank customers can buy car or health insurance at their bank

• If you lose your wallet and the cash inside is missing, your bank will pay to replace it up to a certain amount

What does it mean to "pay yourself first"?

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

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

• Save money when you are young so you can spend more money when you are older

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

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

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

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

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

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

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

• Your back-to-school clothes and supplies

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?

• $480 per month

• $10,000 per month

• $20 per month

• $25 per month

What is the financial benefit of compound interest?

• When you earn compound interest, you earn interest ONLY on the principal

• The interest rates banks offer for compound accounts are always higher than for simple accounts

• When earning compound interest, you don't accumulate as many bank fees

• When you earn compound interest, you earn interest on both the principal and any interest you've already earned

Diamond makes $200 per month by babysitting her neighbor's son after school. She wants to buy her dad something really special for Father's Day next year, and the holiday is 10 months away. Which strategy will work best to make sure she has enough saved by then?

• Save all $200 every month until Father's Day without spending anything on herself

• Don't worry about saving until closer to Father's Day -- she'll figure something out

• Figure out how much she'd like to spend, and then divide the cost by 10 so she knows how much to save each month

• Spend her money freely, but any time she has spare cash at the end of a month, put it in savings

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?

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

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

• Spend less time cutting grass and more time saving money

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

When you open your first savings account, you will need to bring each of these things EXCEPT...

• Proof of your mailing address

• Some form of identification (ID)

• An adult if you're under 18

• A letter from your employer