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WorksheetsDave Ramsey Chapt. 1 & 2 Review
Total questions: 50
Worksheet time: 4hrs 10mins
The persistent rise in the cost of goods and services.
Economy
Uprising
Inflation
Deflation
When a person intentionally invests money in a place where it can earn more money.
Wealth Building
Sinking Fund
Savings
Investment Capital
Save a $500 emergency fund.
the Fourth Foundation
the Third Foundation
the Second Foundation
the First Foundation
The five steps to financial success.
Five money myths
Five banking steps
Five Foundations
None of the above
Compares after-tax income to the money people spend on a variety of items.
Savings rate
Interest rate
Net income
Gross income
Interest paid on interest previously earned.
simple interest
compound interest
percentage interest
none of the above
Money today has different buying power than the same amount of money in the future.
simple interest
compound interest
principle
time value of money
Percentage paid to a lender for the use of borrowed money, or the percentage earned on invested principal.
credit card
principal
savings rate
interest rate
Saving money over time for a large purchase.
piggy bank
value of money
installment loan
sinking fund
Money set aside and left alone for a "rainy day."
credit card
emergency fund
checking account
savings account
You should hold off on investing for retirement until you have college or other post-secondary education paid for.
True
False
You should keep your emergency fund in the same account as your spending money.
True
False
Your income level greatly affects your savings habits.
True
False
The first thing you should save for is your retirement fund.
True
False
Why should interest earned not be a factor with your emergency fund?
Inflation can eat up the interest earned.
Interest-bearing accounts at banks earn a high-rate of interest, therefore, interest is not a concern.
The emergency fund is not intended to grow wealth.
None of the above
Why is having a fully funded emergency fund so important when it comes to your financial well-being?
As long as you have a good-paying job, you really don't need an emergency fund.
The purpose of an emergency fund is to set money aside for unexpected financial emergencies and to provide a sense of financial security.
The purpose of an emergency fund is to have money set aside for large purchases, like vacations.
None of the above
Which of the following is NOT one of the three basic reasons for saving money?
Build wealth
Have money available to lend to friends
Large purchases
Emergency fund
Which of the following is a reason that people don't save money?
They lack focus
They do not live on a budget
They lack discipline
All of the above
Which of these is NOT a key to saving money?
Focus
Making saving a habit and a priority
Your income
Discipline
For which of the following should you save?
Emergency fund
Wealth building
Purchases
All of the above
This principle suggests that a certain amount of money today has different buying power than the same amount of money 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.
Inflation
Interest rate
Time value of money
Opportunity cost
The saving habits of Arthur and Ben best illustrate which principle of saving?
The length of time money is invested matters.
The amount of the initial investment is the key.
Rate of return matters.
Both A and C
What does it mean to have a negative savings rate?
Spending more money than you make and acquiring debt
Having no savings at all
Having a fully funded emergency fund
Saving for something that is a want instead of a need
Instead of borrowing money for large purchases, you should set money aside in a ____ over time and pay with cash.
Mortgage fund
Credit card fund
Sinking fund
Emergency fund
Which of the following steps is the First Foundation?
Get out of debt
Build wealth and give
Save a $500 emergency fund
Pay cash for your car
All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc.
currency
personal finance
economy
consumerism
A period of temporary economic decline during which trade and industrial activity are reduced; generally identified by a fall in gross domestic product (GDP).
downturn
market economy
recession
none of the above
A debt evidenced by a "note", which specifies the principal amount, interest rate, and date of repayment.
bank fee
loan
interest
debt
A system by which goods and services are produced and distributed.
banking system
consumerism
assets
economy
A fee paid by a borrower to the lender for the use of borrowed money.
interest
debt
credit
bills
The knowledge and skill set necessary to be an informed consumer and manage finances effectively.
budgeting
banking knowledge
financial literacy
consumerism
The granting of a loan and the creation of debt; any form of deferred payment.
annual fee
asset
credit
consumer
An obligation of repayment owed by one party to a second party.
borrower
creditor
ownership
debt
A person or organization that uses a product or service.
creditor
Dave Ramsey
consumer
borrower
A person or business that offers loans at extremely high interest rates.
bank
consumer
creditor
loan shark
Everyone should have the same financial plan. A budget that works for one person should be sufficient for everyone.
True
False
Expensive houses and new cars are a true indication of wealth.
True
False
Learning the language of money is not that important because you will be able to depend on financial planners to manage your money.
True
False
Most Americans avoid the use of credit when it comes to buying big-ticket items like a car or furniture for their home.
True
False
Most Americans today are wealthy and will have financial security when they retire.
True
False
True financial security is achieved when your money begins to generate an income -- your money starts working for you.
True
False
When it comes to personal finance, the math is easy. What's challenging is managing your _____.
Bank account
Friends
Income
Behavior
Why was the use of credit uncommon prior to 1917?
Lending money to others was not profitable.
Laws prevented lenders from charging high interest rates.
Borrowing money was generally not socially acceptable.
All of the above
When it comes to managing money, success is about ___% knowledge and ____% behavior.
50, 50
60, 40
80, 20
20, 80
Which of the following is NOT a true statement?
As banks made higher profits, they were willing to lend more money to consumers.
After 1970, consumer debt skyrocketed.
The credit industry in America has not changed much since 1917.
Americans learned to borrow amidst post-WWII prosperity.
Which of the following is a consequence of spending more than you make?
A cycle of debt
Stress
Missed opportunity to save and invest
All of the above
Which of the following statements BEST explains why income alone does not determine wealth?
How much money a person makes does not dictate his or her spending and saving behavior.
Only people who are natural savers can become wealthy.
Income alone does determine a person's wealth.
Investing is the only factor that contributes to wealth building.
Personal financial success is primarily the result of:
Inheriting money from your parents
Generous welfare and unemployment programs
Winning the lottery
Managing your money behavior
Which of the following statements best describes how Americans are being outsmarted by banks and other lenders?
We are driven by consumerism.
Buying things on credit has become acceptable in our culture.
We are taught that we can buy happiness.
Credit is marketed so well that we desire to have it while completely dismissing the fact that interest rates and fees continue to destroy our financial well-being.
Key components of financial planning include all of the following except:
Regularly monitor and reassess your financial plan
Allow your financial planner to make all of your major money decisions
Replace money myths with money truths
Write out a detailed plan for accomplishing your goals
