Worksheets2021-2022 Savings Unit Test Review
Total questions: 70
Worksheet time: 35mins
Insures deposits in US banks against bank failure
Federal Deposit Insurance Corporation
Federal Deposit Insurance Company
Federal Deposit and Withdrawal Corporation
Federal Deposit and Withdrawal Corporation
A popular savings rule of thumb in which a portion of your income goes towards necessities, a portion goes towards saving and debt repayment, and portion goes towards flexible spending
50-20-30 Rule
20-30-50 Rule
30-50-20 Rule
50-30-20 Rule
Interest earned on both the principal amount and any interest already earned
Compound Interest
Simple Interest
Interest
Investments
An account, typically offering higher interest rates, that is managed entirely with no physical bank branch
Online Savings Account
Mobile Savings Account
Savings Account
Physical Savings Account
The U.S. administration insuring deposits in credit unions against failure
National Credit Union Administration
National Credit Union Corporation
National Credit Union Company
National Credit Union Incorporated
debts or what is owed to others
Liabilities
Indebtedness
Obligation
Culpability
An automatic electronic deposit of net pay to an employee's designated bank account
Direct Deposit
Security Deposit
Electronic Funds Transfer
Direct Transaction
Interest paid on the principal alone
Simple Interest
Interest
Compound Interest
Principal Interest
The profit or income generated by savings or investing.
Return
Income
Profit
Loss
The amount you earn as the benefit of depositing money in an account
Interest
Principal
Investment Income
Interest Income
Money set aside for unanticipated expenses or loss of income
Emergency Fund
Opportunity Cost
Pay Yourself First
Direct Deposit
The amount of an individual's take-home pay after taxes and other deductions have been taken out.
Net Income
Income
Total Income
Calculated Income
Original amount of money saved or invested, separate from interest or earnings
Principal
Earnings
Deposit
Income
Your account number, the number that corresponds with your account
Account ID
Personal Identification
Individual Account ID
Account Information
Everything an individual or household owns that could be sold for cash.
Assets
Liabilities
Capital
Equity
The value of the next best alternative that must be foregone.
Opportunity Cost
Alternative Opportunity
Opportunity Alternative
Alternative Cost
A method of saving whereby you put a fixed amount of income into a savings account before you pay monthly bills or make purchases
Pay Yourself First
Emergency Fund
Direct Deposit
Allotments
An account that typically pays higher interest, requires a higher minimum balance, and may allow check writing
Money Market Savings Account
Online Savings Account
Mobile Savings Account
Mobile Money Market Account
Lowest amount of money you can have in an account
Low Minimum Balance
Low Balance
Minimum balance
Low Minimum
An account in which you can save pre-tax dollars to pay for out-of-pocket medical expenses
Health Savings Account
Emergency Savings Account
Health Account
Savings Account
A savings certificate with a fixed interest rate and maturity date, holding the saver's money until it fully matures
Certificate of Deposit
Deposit
Certificate
Certificate of Payment
The rate at which the price of goods increases and consumer purchasing power decreases over time
Inflation
Prosperity
Deflation
Monetary Observations
A measurement of your assets (money you've saved or things of value you own) minus your liabilities (money you owe others)
Wealth
Income
Abundance
Revenue
The end result of something a person intends to acquire, achieve, do, reach or accomplish.
Goal
Ambition
Objective
Accomplishment
Specific objectives to be accomplished through financial planning.
Financial Goals
Financial Observations
Goals
Goal Observation
Somewhere where someone can deposit, withdraw, save money, and earn interest
Basic Savings Account
Savings Account
Money Market Account
Local Savings Account
A paper or electronic document used to record income through expenditures/purchases over a period of time.
Spending Plan
Plan
Budget
Spending Budget
The portion of current income not spent on consumption.
Savings
Checking
Inflation
Money Market
A popular trick to find out how long it will take your money to double depending on what interest rate you are receiving
Rule of 72
Rule of 27
Financial Rules
Financial decisions
The amount of money left when liabilities are subtracted from assets.
Net Worth
Worth
Assets
Financial Worth
Which of these statements about saving is INCORRECT?
It is extremely difficult to open a savings account, as you typically need at least $10,000 for your initial deposit
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
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 it
Which of the following is an effective strategy for personal saving?
Save a certain percentage of each paycheck and deposit it directly into a savings account
Wait until the end of the month and save whatever is left in your checking 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
Which of the following statements about banks is FALSE?
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
Many banks pay interest on the money you deposit with them
If it is FDIC-insured, your money is safe even if the bank fails
Fill in the blanks with the correct responses. If you follow the 50-20-30 rule of budgeting, you'll be putting 50% of your monthly income toward _______________, 20% of your monthly income toward _____________, and 30% of your monthly income toward ______________
Needs, savings, wants
Wants, needs, savings
Savings, needs, wants
Needs, wants, savings
Which statement best describes the difference between saving and investing?
Savings can cause the purchasing power of your money to decrease while investing can outpace inflation and grow
your money
Saving is for low-income people, while investing is for rich people
Saving protects your money from inflation while investing does not protect your money from inflation
Saving is done with small amounts of money, and investing is done with large amounts of money
Which represents the best time to start saving for your retirement?
As soon as you graduate and have your first full-time job
Right after you pay off your student loans
Once you are debt-free, including paying off all credit cards, auto loans, and your mortgage
At age 45, so you have exactly 20 years until retirement
Which of the following statements is TRUE?
The majority of Americans do NOT have an adequate emergency fund or sufficient amounts of money saved for retirement.
The majority of Americans have sufficient amounts of money saved for retirement.
The majority of Americans have an adequate emergency fund.
The majority of Americans have an adequate emergency fund, but do NOT have sufficient amounts of money saved for retirement.
Why is investing a better option than saving when it comes to planning for retirement?
The stock market historically has returns higher than the rate of inflation, so your money can actually grow
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
Experts recommend that you accumulate enough to cover 3 to 6 __________________ of expenses in your emergency fund.
Months
Weeks
Years
Days
What is meant by the term “impulse shopping?”
Buying an item without giving it much thought, maybe because it’s on sale or you see it and simply love it
Comparison shopping for more expensive items while doing less work to compare cheaper products
Using your emergency fund, rather than your checking account, to make a purchase
Shopping online instead of in stores
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
You overhear your Aunt Tina tell your mom that she, her husband, and their kids are "living paycheck to paycheck." What does Aunt Tina mean by that?
Aunt Tina and her family don't have any money saved, and their paychecks are just barely covering monthly expenses, so they use every dollar every month
Aunt Tina uses her paychecks as income to deposit into her checking and savings accounts
Aunt Tina and her family have high paying jobs and don’t worry much about money
Aunt Tina gets a paycheck one month, and her husband gets a paycheck the next month; they alternate pay periods
Which of these is NOT a way a savings account differs from a checking account?
Balance in savings accounts rarely earn interest, so they are poor ways to save, but are excellent for transactions
Balances in a savings account are far less accessible than that in a checking account.
Banks readily lend out money in a savings account to other customers, which is why they pay interest on balances in savings accounts.
Balance in savings accounts earn interest and are good savings vehicles.
What account fees should you avoid with savings accounts?
Avoid accounts that have any maintenance fees; a saver is providing low-cost money to banks that they can lend out
Avoid fees that will reduce the hard-earned money deposited in a savings account
Savers should expect to pay fees on a regular basis
Be on the lookout for fees related to too many withdrawals or minimum balance requirements
Which strategy will help you save the most money?
As soon as you receive your paycheck, put a fixed amount or percentage of your money directly into your savings.
Wait until the end of the month and any money that you have not spent, add it to your savings account.
On the last day of each month, deposit a fixed $10 to your savings account.
Only deposit into your savings account when you have a large lump sum of money.
What is the benefit of automating your savings account contributions?
Your money will be transferred automatically and guarantees you will be contributing to your savings.
You can change the amount you deposit each month.
The fees are relatively small to enroll in this service.
Your employer will contribute additional money to your savings account if you enroll in this service.
What does it mean to "pay yourself first"?
Deposit money into your savings account before spending on anything else.
Purchase an item you want before something you need.
Pay all of your mandatory expenses before paying for optional expenses.
Obtain an additional job to supplement your income.
Which statement best summarizes how compound interest helps you accumulate savings even faster?
Interest earned on interest
Interest earned on the principal amount only
Interest paid based on the prime index
Interest paid based on the stock market
Which statement best reflects why it is vital that you contribute monthly not only to savings but also to an emergency fund.
A saver cannot predict when they will be unable to earn income due to unemployment or an injury
Emergency funds should act as an additional saving or investing fund and be used for day to day expenses
A saver should occasionally need to borrow on credit/loan or draw down on retirement or other savings accounts for unplanned expenses
Emergency funds should only need to be added to once a year
Why shouldn’t you keep your emergency fund money in your checking account?
Money in a checking account could be used for day-to-day expenses, which is not the purpose of an emergency fund
Avoid the temptation to use money in an emergency fund for unplanned and expected expenses.
Money in a savings account will not outpace inflation
Checking accounts will not insure your money earns interest on interest
Experts recommend you save money in an "emergency fund." Which of these represents an expense where the emergency fund would be particularly useful?
$150 Speeding Ticket
Car insurance
Occasional fancy dinner or vacations
Monthly rent
Which of the following is an investment?
Money deposited into a 401(k) account
Money you are planning to spend on a trip
Money you are planning to spend on a new car
Money deposited into a savings or checking account
Your friend Beth just got a new job and has a goal to save for a new smartphone. What information does she need to know about the smartphone in order to make a plan for her goal and meet it?
The price of the smartphone
The number of text messages she’ll be able to send
The size of the smartphones screen
The speed of the data plan
Choose the option that best completes this sentence: To make sure your savings do not lose value over time, you want to make sure that the rate of return you are receiving is…
Higher than the rate of inflation
Lower than rate of inflation
Lower than 2%
Higher than 2%
Which option would be BAD advice for someone trying to save?
Regularly withdraw large funds from your savings account even if you don’t need the money to show your bank that you are an active member
Make trade offs: spend a bit more on items you care about and less on those you don’t
Find out when your electricity provider’s off-peak hours are so that you can do your laundry and other chores that require energy at cheaper times
Be wary of coupons when grocery shopping, because they may cause you to buy things you wouldn’t have originally purchased
Which of the following is a good reason to start saving for retirement in your early 20s?
You'll benefit substantially from compounding interest over all those years
You might have student loan debt to pay off as well
Banks typically offer young people higher interest rates, so you'll earn more interest
Banks typically offer young people lower interest rates, so you'll pay less in interest
Which of these is NOT a known reason that people impulse shop?
A concern about inflation and its impact on the future cost of goods
The fear of missing out on a great deal
Strategic pricing and ads that lead you to believe that if you buy now, you'll save overall
A sense that the product will make your life substantially better
Why is it dangerous to live paycheck-to-paycheck?
If you lose your job you will have no way to pay bills
Low-income people often live paycheck-to-paycheck
You will never be able to afford nice things
If your pay increases, you will have to redo your entire budget
Which of the following does NOT represent saving?
Saving is for short term
Savings will outpace inflation
Saving is for the long term
Saving involves a lot of risk
Which statement best reflects a strategy to save more easily?
Cut your expenses
Ensure you receive your paycheck in cash not direct deposit
Save last, not first
Do not worry about being a smart shopper
Denver 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?
Certificate of Deposit
Checking Account
Money Market Account
Regular Savings Account
You are 18 years old, opening your first savings account, and are considering three options:
BANK A is not FDIC insured, has an interest rate of 5%, and a minimum deposit of $25.
BANK B is FDIC insured, has an interest rate of 0.01%, and a minimum deposit of $50.
BANK C is FDIC insured, has an interest rate of 0.02%, and a minimum deposit of $10,000.
All three have fees competitive with other banks. Which bank is the best option?
Bank B
Bank A
Bank C
All three banks are equally good options
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, college tuition, a house down payment
Checking accounts only
Checking accounts and online savings accounts
Checking accounts, online savings accounts, and money market accounts
Which statement best describes the difference between saving and investing?
Saving goes into an FDIC insured bank while investing typically goes into stock or bond markets
Saving is for low-income people, while investing is for rich people
Saving protects your money from inflation while investing does not protect your money from inflation
Saving is done with small amounts of money, and investing is done with large amounts of money
Your sister Raegan has her paycheck direct deposited into her checking and savings accounts each pay period. She asks you how she should split her paycheck between the two accounts. What is the best advice you could offer her to encourage her savings habit?
Add at least 10-20% of her paycheck to her savings account and the remaining 80-90% to her checking account
Direct deposit the full amount of the check each month into her checking account and then decide later how much to put into savings
Add at least 95% of her paycheck to her checking account and 5% to her savings account because you know that saving is hard for her
Do not have her paycheck direct deposited since it is NOT a secure way to transfer money
How is an online savings account different from a traditional savings account?
An online savings account is offered by a bank that customers can only access online rather than at a physical bank branch
Online savings accounts cannot be FDIC insured, whereas traditional savings accounts can
Online savings accounts will only offer electronic statements rather than paper copies
An online savings account includes a mobile app, while a traditional savings account does not
Three of these statements best describe a checking account. Which statement best describes a savings account?
This account pays you interest on money you have put away for later to help your money grow
This account typically allows an unlimited number of transactions per month
This account is automatically debited when you use a debit card
This account offers a convenient way to pay bills and access cash from an ATM
Which is NOT one of the three reasons it is important to start saving or investing for retirement as early as possible.
Most people have more than enough saved for retirement and do not need to invest
Money accrues more interest if saved or invested earlier (longer time for compounding interest).
You will have to invest more money if you start later in order to achieve the same retirement goal. As you age, the “catch up” savings for retirement will be huge to compensate for not saving when you were younger.
You never know when an emergency will occur, and you may need your savings when it does.
Wealth is calculated by...
subtracting your total debt from your total assets
adding up all your money
adding up your assets and your debt
subtracting your money from your savings
Each of the following is a good reason you should contribute regularly to a savings account EXCEPT:
Ensure you have enough rent money for next month
Work toward saving enough for a car or home down payment
Avoid borrowing money or paying credit card interest by having enough savings to pay cash for new smartphone
Reduce amount of student loans needed by saving in advance for college
