Savings

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

• Regular savings account
• Money Market account
• Checking account
• Certificate of Deposit

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

• Wait until the end of the month and save whatever is left in your checking account
• Save a certain percentage of each paycheck and deposit it directly in a savings account
• Cover all of your wants and needs and save whatever is left over
• Take out a payday loan so you can save before you receive your paycheck

Which of the following statements about banks is FALSE?

• If it is FDIC-insured, your money is safe even if the bank fails
• Many banks pay interest on the money you deposit with them
• Historically, savings accounts earn higher returns than investments in the stock market
• Money in a bank is usually easy to access via ATM, debit card or check

Which of the following is NOT a good reason to create an emergency fund?

• Provides peace of mind
• Keeps you out of debt by giving you money to cover unexpected expenses
• Pays for big ticket items like a vacation or designer clothing
• Covers your expenses if you should lose your job

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

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

Which represents the best time to start saving for your retirement?

• As soon as you graduate and have your first full-time job
• Right after you pay off your student loans
• Once you are debt-free, including paying off all credit cards, auto loans, and your mortgage
• At age 45, so you have exactly 20 years until retirement

Which of the following statement is TRUE?

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

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

• Days
• Weeks
• Months
• Years

Your sister Reagan has her paycheck direct deposited into her checking and savings accounts each pay period. She asks you how she should split her paycheck between the two accounts. What is the best advice you could offer her to encourage her savings habit?

• Direct deposit the full amount of the check each month into her checking account and then decide later how much to put into savings
• Add at least 95% of her paycheck to her checking account and 5% to her savings account because you know that saving is hard for her
• Add at least 20% of her paycheck to her savings account and the remaining 80% to her checking account
• Do not have her paycheck direct deposited since it is NOT a secure way to transfer money

You overhear your Aunt Tina tell your mom that she, her husband, and their kids are "living paycheck to paycheck." What does Aunt Tina mean by that?

• Aunt Tina gets a paycheck one month, and her husband gets a paycheck the next month; they alternate pay periods
• Aunt Tina and her family don't have any money saved, and their paychecks are just barely covering monthly expenses, so they use every dollar every month
• Aunt Tina and her family have steady incomes with a guaranteed paycheck every two weeks
• Aunt Tina uses her paychecks as income to deposit into her checking and savings accounts