Strategies to Save

Various rules of thumb and strategies to save money include:

• Creating a budget and tracking expenses

• Spending more than you earn

• Ignoring sales and discounts

• Avoiding any form of savings

Identify which of the following is an example of short, medium, and long-term savings goals.

• Saving for a vacation, buying a car, saving for retirement

• Saving for retirement, buying groceries, paying rent

• Buying a car, paying monthly bills, saving for a vacation

• Paying rent, saving for a vacation, buying groceries

An emergency fund is for which of the following purposes and how much should you save up?

• To cover unexpected expenses; typically 3-6 months of living expenses

• To invest in stocks; at least 12 months of income

• To pay for planned vacations; 1 month of salary

• To buy luxury items; as much as possible

The video suggests saving...

• 10% of your income

• 50% of your income

• 5% of your income

• 25% of your income

The portion of your paycheck that is designated for saving falls under which categories?

• Savings and investments

• Entertainment and leisure

• Utilities and bills

• Groceries and dining

Starting to save or invest now is sensible because:

• it allows your money to grow over time through compounding.

• it guarantees instant wealth.

• it eliminates all financial risks immediately.

• it prevents you from ever needing a budget.

One reason it's crucial to begin saving early is:

• You have more time to grow your savings through interest and investments.

• You can spend more money on unnecessary things.

• It is easier to borrow money later in life.

• You will never need to budget your expenses.

Which of the following is an example of a short-term and a long-term saving goal, and how can recommended savings guidelines help you achieve these goals?

• Saving for a vacation (short-term) and retirement (long-term); guidelines help by setting targets for how much to save regularly.

• Saving for groceries (short-term) and buying a coffee (long-term); guidelines help by encouraging spending.

• Saving for a new phone (short-term) and buying snacks (long-term); guidelines help by suggesting to spend more.

• Saving for a movie ticket (short-term) and a concert (long-term); guidelines help by ignoring savings.

When calculating the percentages for each budget category, you should use your pre-tax income. Highlight your response.

• True

• False

Fill in some examples of items that would fit into the 50% Needs budget category.

• rent, groceries, utilities

• concert tickets, designer clothes, video games

• vacation, spa treatments, luxury watches

• movie streaming, gourmet chocolates, collectibles