Chapter 3 Review - Saving Money

45% of Americans have less than $1,000 saved for a(n) _____.

• emergency

• car

• retirement fund

• new smartphone

You will 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.

Once you have a $500 emergency fund, you should...

• start putting it toward debt.

• save it until you have an emergency.

• invest in the stock market to grow your money.

• use the money to pay for health insurance.

The first step you should take when you want to make a large purchase is...

• ask your parents to loan you the money with low interest.

• get a new credit card.

• decide how much you'll need to save and the time frame you want to save it in.

• sell something and use the proceeds.

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

• as soon as you have extra cash.

• 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.

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 of inflation

• because those accounts always have great interest rates

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

• when

• why

• where

• how

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

If someone save the equivalent of a car payment each month for a year or two (instead of spending it on payments and interest), he/she could have enough money to buy a car with cash for much cheaper.

• True

• False

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

• investing in the right stocks and using a private CPA

• consistently investing money and patience to give it time to grow

• always paying off your credit card on time and putting extra money into a retirement account