Strand 4, Standard 2: Saving Money

What does "Pay Yourself First" (PYF) mean?

• Spending all your money on bills and expenses before saving anything

• Saving a portion of your income before spending on anything else

• Using all your income for paying debts and entertainment

• Borrowing money from a bank to start investing

What is the purpose of an emergency fund?

• To pay off all of your loans as quickly as possible

• To cover unexpected expenses, like medical bills or car repairs

• To buy items that you don’t really need, such as luxury products

• To pay for regular, planned monthly bills, like rent or groceries

Which of the following is a common saving option with low risk and easy access?

• Real estate, where you invest in property

• Savings account, which keeps your money safe with easy access

• Stocks, which can increase in value but also have high risk

• Gold, which can rise in value but is difficult to access quickly

What is a certificate of deposit (CD)?

• A type of checking account used for daily expenses

• A type of savings account that offers a fixed term and a higher interest rate

• A loan you take out from the bank to pay for large purchases

• A type of retirement account meant for long-term investments

What is the primary disadvantage of a CD?

• You can withdraw money at any time without a fee, so there’s no risk

• You may have to pay a penalty if you withdraw money before the end of the term

• CDs offer no interest at all, making them similar to a regular checking account

• CDs are available only at credit unions, not at traditional banks

How does inflation affect savings?

• It increases the purchasing power of money, allowing you to buy more over time

• It reduces the purchasing power of money, making goods and services more expensive

• It has no effect on savings, so your money’s value stays the same

• It guarantees a fixed return on your investment, similar to a savings account

What is a benefit of putting money in a savings account?

• It offers high-interest rates that significantly grow your savings quickly

• It provides easy access to funds with minimal risk of losing your money

• There are no account minimums required, making it accessible to everyone

• It has high fees for each transaction, which helps with account management

Why might someone choose a CD over a regular savings account?

• To earn a higher interest rate than what a typical savings account offers

• To withdraw money frequently without restrictions or penalties

• To avoid any early withdrawal penalties and get unlimited access to funds

• To keep money unprotected by FDIC or NCUA insurance

What does over-saving refer to?

• Saving too much in low-interest accounts without considering other growth options

• Failing to save enough for emergencies or future expenses

• Placing money in high-risk investments with the potential for quick returns

• Spending all your income immediately without putting any aside for the future

Which saving method typically has higher interest but restricts access to funds for a set time?

• Checking account, which allows frequent transactions and easy access

• Certificate of Deposit (CD), which offers higher interest but limits access until maturity

• Retirement fund, which is intended for long-term saving until retirement

• P2P account, which allows instant transfers to other people