Chapter 3 Quiz Review

45% of Americans have less than $1,000 saved for an _______.

• Emergency

• Car

• Retirement fund

• New smartphone

You will have less freedom with your money if . . .

• You invest in the stock market

• You are paying for things from your past

• You put money in a bank account

• You earn less than $35,000

Once you have an emergency fund of $500, you should . . .

• Start using it to pay off debts

• Keep it until you have an emergency

• Invest it 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 big purchase is . . .

• Ask your parents to lend you money at a low interest rate

• Get a new credit card

• Decide how much you need to save and in what timeframe you want to do it

• Sell something and use the profits

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

• As soon as you have extra money

• Once you have a fully funded emergency fund

• Once you have finished college, are living debt-free, and have saved 3 to 6 months of living expenses

• When the stock market is performing very well

Why do some accounts, such as savings accounts at your local bank, generate interest?

• Because you deposit money, adding to your principal each month

• Because the bank pays you for using your money

• Because of inflation

• Because those accounts always have excellent interest rates

It is not a question of IF an emergency will happen, but _______.

• When

• Why

• Where

• How

If you really want to save money, you have to . . .

• Fly in economy class

• Live on less than you earn

• Invest in a Roth IRA account

• Have a financial advisor

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

• An envelope in a safe place

• A Roth IRA account

• A safe in your bedroom

• A savings account or a money market account.

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

• False

• True