Savings Unit: Study Guide

1. Juan saved $1,000 from his summer job cleaning pools. Which of these account types would work best for him if he doesn't need access to the money for a number of years AND wants to earn the highest interest rate?

• Checking account
• Certificate of Deposit

2. Which of the following is an effective strategy for personal saving?

• Save a certain percentage of each paycheck and deposit it directly into a savings account
• Cover all of your wants and needs and save whatever is left over

3. Joelle wants to have an emergency fund. Her monthly gross pay is $4,000. If she plans to save 10% of her gross pay each month, how much money will she save each month?

• $40
• $400

4. Which of the following statement is true about bank accounts?

• Many banks pay interest on the money you deposit into your savings account
• Historically, savings accounts earn higher returns than investments in the stock market

5. All of the following are true about prepaid cards EXCEPT…

• Prepaid cards are a great way to build credit
• Prepaid cards are usually accepted anywhere that debit and credit cards are accepted

6. You are developing a savings plan and using short-, medium-, and long-term goals to motivate you. Which represents possible goals from short-term to long-term? Save for…

• A new cell phone, college tuition, a house down payment
• Retirement, college tuition, a vacation

7. Fill in the blanks with the correct responses. If you follow the 50-30-20 rule of budgeting, you'll be putting 50% of your monthly income toward _______________, 30% of your monthly income toward _____________, and 20% of your monthly income toward ______________.

• Needs, wants, savings
• Savings, needs, wants

8. Which represents the BEST time to start saving for your retirement?

• As soon as you have your first full-time job
• At age 45, so you have exactly 20 years until retirement

9. Which of the following statements is TRUE?

• The majority of Americans have an adequate emergency fund
• The majority of Americans do NOT have an adequate emergency fund or sufficient amounts of money saved for retirement

10. Experts recommend that you accumulate enough to cover 3 to 6 __________________ of expenses in your emergency fund.

• Weeks
• Months