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WorksheetsSavings Review
Total questions: 42
Worksheet time: 32mins
How quickly and easily assets can be accessed and converted into cash.
Interest
Liquidity
Goal
Interest
The portion of current income not spent on consumption.
Interest
Savings
Wealth
Liquidity
The price of money
(a)
Everything an individual or household owns with monetary value.
Assets
Liability
Owner's Equity
Wealth
Wealth is a measurement of how much a person or household owns once all debts have been paid.
True
False
The percentage rate paid on money invested or saved.
(a)
Principal is the original amount of money saved or invested.
True
False
The end result of something a person intends to acquire, achieve, do, reach, or accomplish is know as a Goal.
True
False
A saving strategy that states to set aside a predetermined portion of money for saving each time a person is paid before using any of the money for spending is called? (3 word answer)
(a)
A trade off is NOT considered giving up one thing for another.
True
False
The value of then next best alternative that must be forgone as a result of a decision?
Pay yourself first
Trade-Off
Opportunity Cost
Compounding Interest
Earning interest on interest is what?
(a)
Experts suggest that your emergency savings be a very liquid savings tool so it is accessible if it's needed quickly.
True
False
What is a way people can find money to save?
Use internet at the library instead of paying for it at home
Mow your own yard
Get a part time job
all of these
"Pay yourself first" is an essential component of personal financial management to ensure that you always save.
True
False
It is important to consider opportunity cost and trade-offs when determining how to save money.
True
False
Experts suggest that emergency savings equal 3-6 months of a person's expenses be held in liquid assets for unplanned events.
True
False
The longer an individual invests money for, the more compounding interest accrues.
True
False
It is not important to write a savings goal
True
False
When saving money, it is important to have a low interest rate.
True
False
It is important to set goals when saving to justify its importance to yourself?
True
False
What is the opportunity cost of a person's decision to use all of the money he has saved for emergencies to buy stock in a company that pays large dividends?
Price of stock purchased
Commission paid to the broker
Ability to pay for emergencies
Chance to become a stockholder
A saving account is a safe place to store money that is easily accessible when needed.
True
False
John's monthly expenses are greater than his income. What would BEST help him balance his budget?
Increase savings
Revise his W4 form
Reduce spending
Get a credit card
Sally's income is $1,170 per month. Sally's monthly expenses are below. What is the best way for Sally to reduce his monthly expenses?
Rent- 500
Savings-100
Utilities- 150
Insurance-100
Groceries-120
Car Payment- 200
Cleaning Service- 10
turn the heat off in the winter
pay less than the minimum car payment
eliminate the housecleaning service
pay less than the minimum insurance payment
A dollar today is worth more than a dollar promised in the future is the time value of money
True
False
Bob and Mary have a goal to save 15% of their combined income of $95,000 yearly income. How much should they save each month?
1187.50
1025.50
2020.25
14,250
Which asset is most liquid?
Stocks
Real estate
Savings Account
Certificate of Deposit
Which instrument, issued by financial institutions and insured by the FDIC , limits access to money?
Stocks
Mutual Funds
Checking Account
Certificate of Deposit
Which of the following is an effective strategy for personal saving?
Wait until the end of the month and save whatever is left in your checking account
Save a certain percentage of each paycheck and deposit it directly into a savings account
Cover all of your wants and needs and save whatever is left over
Take out a payday loan so you can save before you receive your paycheck
Megan wants to have an emergency fund to cover 6 months of her expenses. Her monthly gross pay is $4,000 and her monthly expenses are $2,000. If she plans to save 10% of her gross pay each month, how long will it take her to build her emergency fund?
3 months
9 months
24 months
30 months
Which of the following statements about banks is FALSE?
If it is FDIC-insured, your money is safe even if the bank fails
Many banks pay interest on the money you deposit with them
Historically, savings accounts earn higher returns than investments in the stock market
Money in a bank is usually easy to access via ATM, debit card or check
Bob saved $1,000 from his summer job cleaning pools. Which of these savings vehicles would work best for him if he doesn't need access to the money for a number of years AND wanted to earn the highest interest rate?
Regular savings account
Money Market Account
Checking Account
Certificate of Deposit
Which of these statements about saving is INCORRECT?
People often believe they are saving when they buy products at a listed discount, even if they didn't need the product in the first place
It is extremely difficult to open a savings account, as you typically need at least $10,000 for your initial deposit
Without a separate savings account to pay yourself first, it's more likely that you'll spend all of your income each month
Billions of dollars are spent on marketing to persuade consumers to spend money instead of saving
Stanley deposits $1,000 into a savings account that pays 1% interest. At the end of the first year, he's earned $10 in interest and there is $1,010 in the account. If the account has simple interest, the 1% interest for year two would be based off ____________. If the account has compounding interest, the 1% interest for year two would be based off ________________.(NOTE: The first choice goes in the first blank, the second choice goes in the second blank)
The original deposit ($1,000); The year one account balance ($1,010)
The original deposit ($1,000); The year one interest ($10)
The year one account balance ($1,010); The year one interest ($10)
The year one account balance ($1,010); The original deposit ($1,000)
You are developing a savings plan and using short-, medium-, and long-term goals to motivate you. Which represents possible goals from short-term to long-term? Save for…
A new cell phone, dinner with friends this weekend, a new bike
Retirement, a house down payment, college tuition
A new cell phone, college tuition, a house down payment
Retirement, college tuition, a vacation
If you follow the 50, 20, 30 rule of budgeting, 50% is for needs, 20% is for savings, and 30% is for wants.
True
False
Why is investing a better option than saving when it comes to planning for retirement?
Investing usually has lower interest rates, so it offers a better deal
Investing is guaranteed to produce the large sum of money needed for a happy retirement
Investing begins as soon as you open a bank account, so you can start early in life
The stock market historically has returns higher than the rate of inflation, so your money can actually grow
Buying an item without giving it much thought, maybe because it’s on sale or you see it and simply love it is considered impulse buying.
True
False
Which of these is an example of "Keeping up with the Joneses?"
Buying new sneakers the day they come out, because you know others in your class will have them, too
Applying to the top colleges, to see if you'll get accepted & what financial aid packages they'll offer
Saving for retirement as soon as you graduate college, to take advantage of compounding interest
Buying plane tickets for vacation well in advance so that you'll benefit from cheaper prices
In current markets, which of these represents a competitive but realistic interest rate on a savings account?
2%
10%
7%
17.99%
You are finally off quarantine and you really want to splurge for a vacation to the Bahamas. The most responsible thing to do is to put the vacation on a credit card.
True
False
