Chapter 3 Earnings and Income Test

To accumulate wealth, you need to generate a(n)?

• Surplus.

• Deficit.

• Expense.

• Loan.

Which of the following refers to the money left over after all of your expenses have been paid?

• Surplus

• Deficit

• Net worth

• Assets

Which of the following refers to expenses exceeding income?

• Surplus

• Deficit

• Net worth

• Assets

Which of the following indicates the percentage of income that you are actively saving?

• Surplus

• Deficit

• Net worth

• Savings ratio

Which of the following is the same as a savings ratio over a specific time period?

• Surplus.

• Deficit.

• Targeted savings ratio.

• Assets.

Which of the following indicates the percentage of your income that you are spending to pay down your debts?

• Surplus.

• Total debt to income ratio.

• Targeted savings ratio.

• Savings ratio.

Which of the following refers to having your employer take money automatically from your paycheck and contribute it directly to a retirement savings plan or a savings account?

• Payroll deduction.

• Total debt to income ratio.

• Targeted savings ratio.

• Savings ratio.

Which of the following is the recommended targeted saving rate if you are under age 30?

• 10%

• 12%

• 15%

• 20%

Which of the following is the recommended targeted saving rate if you are between age 30 and 40?

• 10%

• 12%

• 15%

• 20%

Which of the following is the recommended targeted saving rate if you wait until age 40 to start saving?

• 10%

• 12%

• 15%

• 20%