Ramsey Vocab Chapter 2 and 3

a savings account set up specifically to be used to cover financial emergencies

• Emergency Fund

• Time Value of Money

• Large Purchase

• Compound Growth

a purchase that requires a significant amount of money

• Large Purchase

• Rate of Return

• Principal

• Inflation

the initial amount of money invested or borrowed

• Principal

• Inflation

• Rate of Return

• Time Value of Money

The main reasons for saving your hard-earned money are . . .

• Emergencies, large purchases, and wealth building

• Paying for your dream home, buying your dream car, and going on your dream vacation

• Buying gifts, donating to charities, and building up a college fund for your kids

• Investing, indulging, and influencing

What is the goal of an emergency fund?

• To pay for large purchases

• To save for your children's college expenses

• To have cash on hand for unexpected events

• To pay for health insurance

The purpose of an emergency fund is to . . .

• Be able to cover an unexpected expense with cash and protect you from having to pile up debt when something goes wrong.

• Teach you how to invest in growth stock mutual funds.

• Have some extra money in a checking account in case you need to transfer some to your spending categories.

• Teach you discipline - saving is purely a good exercise in self-control.

You should budget in this order: giving, savings, spending.

• True

• False

At your age, a fully funded emergency fund should be:

• $500

• $5,000

• $100

• $1,100

Which of the following steps is the First Foundation?

• Get out of debt

• build wealth and give

• save a $500 emergency fund

• pay cash for your car

What are the Four Walls?

• Utilities, college fund, restaurants, and car insurance

• Cell phone bill, car insurance, shelter, and money for the movies

• Food, utilities, transportation, and college fund

• Food, utilities, shelter, and transportation