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Saving Chapter 2

Total questions: 31

Worksheet time: 16mins

Name
Class
Date
1.

Which of the following steps is the First Foundation?

a)

Get out of Debt

b)

Build wealth and give

c)

Save a $500 emergency fund

d)

Pay cash for your car

2.

Instead of borrowing money for large purchases, you should set money aside in a ________________ over time and pay with cash.

a)

emergency fund

b)

sinking fund

c)

credit card fund

d)

mortgage fund

3.

What does it mean to have a negative savings rate?

a)

Saving for something that is a want instead of a need.

b)

Having a fully funded emergency fund

c)

having no savings at all

d)

spending more money than you make and acquiring debt.

4.

The saving habits of Ben and Arthur best illustrate which principle of saving?

a)

The length of time money is invested matters.

b)

The amount of the initial investment is the key.

c)

Rate of return

d)

Both A and C.

5.

This principle suggests that a certain amount of money today has different buying power than the same amount of money at some time in the future. This is due to both the opportunity to earn interest on the money and because inflation will drive prices up, thereby changing the "value" of the money.

a)

Opportunity Cost

b)

Time Value of Money

c)

Interest Rate

d)

Inflation

6.

For which of the following should you save?

a)

Purchase

b)

Wealth building

c)

Emergency Fund

d)

All of the above

7.

Using the sinking fund approach, how much do you have to save each month to buy a $4800 care one year from now?

a)

$400

b)

$300

c)

$275

d)

$500

8.

At your age, a fully funded emergency fund should be:

a)

$500

b)

$5,000

c)

$100

d)

$1,000

9.

Which of these is NOT a key to saving money?

a)

Focus

b)

making saving a habit and a priority

c)

your Income

d)

Discipline

10.

Which of the following is a reason that people don't save money?

a)

They lack discipline

b)

They do not live on a budget

c)

They lack focus

d)

All of the above

11.

Which of the following is NOT one of the three basic reasons for saving money?

a)

Emergency fund

b)

Large purchases

c)

have money available to lend to friends

d)

build wealth

12.

Which of the following is NOT a reason your emergency fund should be kept in a separate savings account away from your spending money?

a)

So that you do not get your spending and saving money confused.

b)

So that it is clear what money is only to be used for emergencies.

c)

so that is is not too easy to access.

d)

So that your emergency fund savings can earn a lot of interest.

13.

Why is having a fully funded emergency fund so important when if comes to your financial well-being?

a)

As long as you have a good-paying job, you really don't need an emergency fund.

b)

The purpose of an emergency fund is to set money aside for unexpected financial emergencies and to provide a sense of financial security.

c)

The purpose of an emergency fund is to have money set aside for large purchases, like vacations.

d)

none of the above.

14.

Saving is about:

a)

Contentment and emotion

b)

Contentment and earning more money

c)

Making more money and discipline

d)

Pride and greed

15.

Why should interest earned not be a factor with your emergency fund?

a)

Inflation can eat up the interest earned

b)

Interest-bearing accounts at banks earn a high rate of interest, therefore, interest is not a concern.

c)

The emergency fund is not intended to grow wealth.

d)

none of the above.

16.

The first thing you should save for is your retirement fund

a)

True

b)

False

17.

Your income level greatly affects your saving habits.

a)

True

b)

False

18.

You should save money for three basic reasons: Emergency fund, purchases and wealth building.

a)

True

b)

False

19.

When it comes to saving money, the amount you save is determined by how much you have left at the end of the month once all of your spending is done.

a)

True

b)

False

20.

When you're older and out of school, you'll need to grow your emergency fund into a full three to six months' worth of expenses.

a)

True

b)

False

21.

You should keep your emergency fund in the same account as your spending money.

a)

True

b)

False

22.

An interest-bearing account is an account that generates interest income on the available balance in the account.

a)

true

b)

false

23.

When you're in high school, you won't have the same emergency expenses as your parents.

a)

True

b)

False

24.

You should hold off on investing for retirement until you have college or pother post-secondary education paid for.

a)

True

b)

False

25.

Americans typically maintain a very high savings rate.

a)

True

b)

False

26.

money set aside and left alone for a "rainy day".

a)

emergency fund

b)

savings account

c)

retirement fund

d)

storm fund

27.

Percentage paid to a lender for the use of borrowed money, or the percentage earned on invested principal.

a)

tax rate

b)

savings rate

c)

prime rate

d)

interest rate

28.

Interest paid on interest previously earned.

a)

interest

b)

compound interest

c)

sinking fund

d)

interest-bearing account

29.

The five steps to financial success are:

a)

Five Saving Tips

b)

Five money myths

c)

The Five Foundations

d)

Keys to success

30.

Save a $500 emergency fund is the ________ step.

a)

First Foundation

b)

Fourth Foundation

c)

Second Foundation

d)

Fifth Foundation

31.

When a person intentionally invests money in a place where it can earn more money.

a)

wealth building

b)

sinking fund

c)

non-interest bearing account

d)

interest bearing account