GFL Strand 4, Standard 2: Pros and Cons of Saving

What does "pay yourself first" (PYF) mean?

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

• Spending money on essentials before saving.

• Paying all your bills before you save anything.

• Using extra income for savings after all expenses.

What is one advantage of paying yourself first?

• It helps you build savings for long-term goals and emergencies.

• It allows you to spend freely without budgeting.

• It avoids the need to track your expenses.

• It eliminates the need for a savings account.

What is a basic saving option?

• Investing in stocks for quick profits.

• Using a savings account to store money and earn interest.

• Borrowing money to increase your savings.

• Keeping cash hidden at home.

What is a Certificate of Deposit (CD)?

• A savings option that locks your money for a set time and earns higher interest.

• A checking account for daily spending.

• A credit card with low interest rates.

• An investment in company shares.

How does a CD differ from a regular savings account?

• CDs have higher interest rates but require you to lock your money for a set time.

• CDs allow unlimited withdrawals without penalties.

• Savings accounts offer better long-term growth than CDs.

• Savings accounts always charge a fee to withdraw money.

What does "savings are designed to preserve principal" mean?

• The money you save should remain safe and grow slowly.

• Savings accounts focus on high-risk, high-reward investments.

• Savings accounts are meant to lose value over time.

• The principal balance in savings should not earn any interest.

How does inflation affect savings?

• Inflation reduces the purchasing power of money in savings.

• Inflation increases the value of saved money.

• Savings accounts are protected from inflation entirely.

• Inflation has no effect on long-term financial plans.

What is the primary goal of a savings account?

• To earn consistent interest while keeping your money safe.

• To spend money quickly without restrictions.

• To double your money in a short time.

• To invest in high-risk assets.

What is a common feature of savings accounts?

• They allow you to withdraw unlimited money at any time.

• They pay a small amount of interest to grow your balance.

• They charge fees for each deposit made.

• They offer high returns with high risks.

What is the risk of "over-saving"?

• Inflation can reduce the real value of your savings.

• Banks may charge fees for saving too much money.

• Over-saving prevents you from using a checking account.

• You lose the ability to earn any interest on your money.