Ramsey Chapter 3 Review

Which principle says that a certain amount of money today is worth more than the same amount in the future?

• Inflation
• Rate of return
• The time value of money
• Principal interest

One of the main reasons we build wealth is so that we can . . .

• Give to those in need
• Spend it all on ourselves
• Impress the people around us
• Prove that we are successful

The best way to build wealth is to start investing early. You should start investing money . . .

• Once you have a fully funded emergency fund
• Once you're out of college, living debt-free, and have 3–6 months of living expenses saved
• When the stock market is performing really well
• As soon as you have extra cash

Why do some accounts, like savings accounts at your local bank, earn interest?

• Because you deposit money, adding to your principal each month
• Because the bank pays you to use your money
• Because those accounts always have great interest rates
• Because of inflation

It's not IF an emergency will happen, but .

• how
• where
• why
• when

If you really want to save money, you've got to . . .

• Fly economy class
• Live on less than you make
• Invest in a Roth IRA
• Have a financial advisor

The only place you should keep your emergency fund money is...

• A savings account or money market account.
• A safe in your bedroom
• A Roth IRA
• An envelope in a safe place

If people saved the equivalent of a car payment each month for a year or two (instead of spending it on payments and interest), they could have enough money to buy a car with cash for much cheaper!

• True
• False

You'll have less freedom with your money if you . . .

• Invest in the stock market
• Are paying for things in your past
• Put money in a bank account
• Make less than $35,000

Which two habits are the most important for building wealth and becoming a millionaire?

• Working a high-paying job and relying on a trust fund
• Always paying off your credit card on time and putting extra money into a retirement account
• Investing into the right stocks and using a private CPA
• Consistently investing money and patience to give it time to grow