Quiz about Savings Unit 2

Question 1

Which of the following represents the 50/20/30 Rule for budgeting?

Accepted Answer

50% Needs, 30% Wants, 20% Savings

Answer

20% Needs, 50% Wants, 30% Savings

Answer

50% Savings, 30% Needs, 20% Wants

Answer

30% Wants, 50% Savings, 20% Needs

Question 2

Things you would like to have but are not necessary.

Accepted Answer

Wants

Answer

Bills

Answer

Savings

Answer

Needs

Question 3

If you get money each week from your parents, possibly for doing chores, this is called what?

Accepted Answer

An Allowance

Answer

Wants

Answer

Savings

Answer

Net Pay

Question 4

Rent, electricity, gas, phone, groceries are examples of costs which are called what?

Accepted Answer

Expenses

Answer

Income

Answer

Taxes

Answer

Wants

Question 5

The total amount of money you receive in a paycheck before anything is taken out is called what?

Accepted Answer

Gross Pay/Income

Answer

Net Pay/Income

Answer

Savings

Answer

Income Taxes

Question 6

A physical or electronic document that provides details about money earned on a job and deductions made.

Accepted Answer

Pay Stub

Answer

Budget

Answer

Allowance

Answer

Income

Question 7

Money that is deducted from a person's income or a company's profits for federal or state purposes.

Accepted Answer

Income Taxes

Answer

Expenses

Answer

Bills

Answer

Net Pay

Question 8

Money that is set aside for future short or long term goals or emergencies is called what?

Accepted Answer

Savings

Answer

Allowance

Answer

Needs

Answer

Wants

Question 9

A debt you owe for goods (ex. food, games or clothes) and services (ex. hair cut).

Accepted Answer

Bills

Answer

Needs

Answer

Income Taxes

Answer

Wants

Question 10

A plan for spending and saving income during a set period of time.

Accepted Answer

Budget

Answer

401k Retirement Account

Answer

Net pay

Answer

Social Security

Question 11

Which is a saving strategy where you put a fixed amount of money into a savings account immediately after receiving your paycheck instead of seeing what is left after paying for needs and wants?

Accepted Answer

Pay Yourself First

Answer

50/20/30 Rule

Answer

Medicaid

Answer

Income Taxes

Question 12

Sam saved $2,000 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 a few years AND wants to earn the highest interest rate?

Accepted Answer

Certificate of Deposit

Answer

Regular savings account

Answer

Money Market account

Answer

Checking account

Question 13

When a bank says their savings account earns 1% interest, that typically means you will earn 1% interest over what period of time (Note: this is not referring to the compounding frequency or frequency of interest payment)?

Accepted Answer

Annually

Answer

Daily

Answer

Monthly

Answer

Quarterly

Question 14

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

Accepted Answer

Save a certain percentage of each paycheck and deposit it directly into a savings account

Answer

Wait until the end of the month and save whatever is left in your checking account

Answer

Cover all of your wants and needs and save whatever is left over

Answer

Take out a payday loan so you can save before you receive your paycheck

Question 15

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

Accepted Answer

As soon as you graduate and have your first full-time job

Answer

Right after you pay off your student loans

Answer

Once you are debt-free, including paying off all credit cards, auto loans, and your mortgage

Answer

At age 45, so you have exactly 20 years until retirement

Question 16

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

Accepted Answer

Months

Answer

Days

Answer

Weeks

Answer

Years

Question 17

Your sister Annhas 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?

Accepted Answer

Add at least 10-20% of her paycheck to her savings account and the remaining 80-90% to her checking account

Answer

Direct deposit the full amount of the check each month into her checking account and then decide later how much to put into savings

Answer

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

Answer

Do not have her paycheck direct deposited since it is NOT a secure way to transfer money

Question 18

Which is NOT a typical goal for a savings account?

Accepted Answer

To buy groceries for this week

Answer

To create an emergency fund

Answer

To pay for higher education

Answer

To save for a new car

Question 19

What is a general rule of thumb on how much you should save?

Accepted Answer

20% of your income

Answer

5% of your income

Answer

10% of your income

Answer

30% of your income

Question 20

About how much should you save in an emergency fund?

Accepted Answer

3-6 months of living expenses

Answer

1-3 months of living expenses

Answer

6-9 months of living expenses

Answer

9-12 months of living expenses

Question 21

What is a good strategy to help you save?

Accepted Answer

Pay yourself first - set aside money for savings each month

Answer

1st, spend money on all expenses; put the rest into saving

Answer

Tap into your savings on a regular basis to purchase small items, like snacks

Answer

Keep your spending and saving money together in 1 account

Question 22

What is a reason for why so many Americans live paycheck-to-paycheck?

Accepted Answer

Many people impulse shop

Answer

Many people are paying themselves first and then spending

Answer

Many people only buy what they NEED, not what they WANT

Answer

Many people spend within their budget

Question 23

How is compound interest different than simple interest?

Accepted Answer

It is simple interest + interest earned on that interest

Answer

It is simple interest - interest earned on that interest

Answer

It is double the simple interest earned on an investment

Answer

It's not different; they are one and the same

Question 24

Assuming a rate of growth of 8%, in how many years will your $ double?

Accepted Answer

9 years

Answer

3 years

Answer

6 years

Answer

12 years

Question 25

At what rate does your $ need to grow in order to double in 18 years?

Accepted Answer

4%

Answer

2%

Answer

6%

Answer

8%

Question 26

What might you need to open a savings account? (hint: choose 2 correct answers)

Accepted Answer

Minimum opening deposit

Accepted Answer

Identification

Answer

Your previous year's tax returns (or your parents')

Answer

The routing number to a checking account

Question 27

True or False: You need a checking account to open a savings account.

Accepted Answer

False

Answer

True

Question 28

1. Which of these costs would be the MOST difficult to adjust if you were looking to reduce your expenses?

Accepted Answer

Loan payment on a new car

Answer

Dining out at local restaurants

Answer

Expenses for new clothes

Answer

Postponing a purchase for a big-screen TV

Question 29

3. If you are trying to substantially reduce the amount you spend on food, you should try...

Accepted Answer

Cooking your own food at home for as many meals as possible

Answer

Dining at restaurants more often so you don't waste water doing dishes

Answer

Eating more snacks on the go and way fewer meals at home

Answer

Drinking more coffee and soda so you are not as hungry for food

Question 30

13.  You're considering moving into a 3 bedroom apartment with 2 roommates, rather than living on your own post-college. Which of your expenses would likely decrease by having roommates?

Accepted Answer

Rent

Answer

Groceries and eating out

Answer

Cell phone bill

Answer

Bedroom furniture

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