WorksheetsChapter 3 Review
Total questions: 30
Worksheet time: 3600secs
Which principle says that a certain amount of money today is worth more than the same amount in the future?
Principal interest
The time value of money
Inflation
Rate of return
45% of Americans have less than $1,000 saved for a(n) _______.
Car
Emergency
New Smartphone
Retirement Fund
You'll have less freedom with your money if you . . .
Make less than $35,000
Put money in a bank account
Invest in the stock market
Are paying for things in your past
Once you have a $500 emergency fund, you should . . .
Use the money to pay for health insurance
Invest it in the stock market to grow your money
Start putting it toward debt
Save it until you have an emergency
The first step you should take when you want to make a large purchase is . . .
Decide how much you'll need to save and the time frame you want to save it in
Ask your parents to loan you the money with low interest
Get a new credit card
Sell something and use the proceeds
The best way to build wealth is to start investing early. You should start investing money . . .
As soon as you have extra cash
Once you have a fully funded emergency fund
Once you're out of college, living debt-free, and have 3–6 months of living expenses saved
When the stock market is performing really well
Why do some accounts, like savings accounts at your local bank, earn interest?
Because the bank pays you to use your money
Because you deposit money, adding to your principal each month
Because of inflation
Because those accounts always have great interest rates
It's not IF an emergency will happen, but _______ .
Where
How
Why
When
One of the main reasons we build wealth is so that we can . . .
Prove that we are successful
Spend it all on ourselves
Give to those in need
Impress the people around us
The amount of interest charged on a debt but not yet collected is called . . .
Interest rate
Growth rate
Accrued interest
Same-as-cash
Which of these would count as a legitimate reason to use your emergency fund?
You have a fancy event coming up but you already spent all of your Clothing budget category
You forgot to budget for your mom's birthday gif
The smartphone you've wanted just went on sale
Your car battery died
90% of millionaires make over $100,000 a year.
True
False
While saving money isn't easy at first, it will make your life a lot in the future if you make it a habit now.
Harder
Easier
Poorer
Longer
In order to outpace inflation when investing, your investments need to have a lower rate of return than the rate of inflation.
True
False
. The top three careers reported among millionaires were ______ , ______, and _____.
Accountants; engineers; teachers
Pro athletes; bankers; CEOs
Celebrities; developers; writers
Lawyers; surgeons; accountants
If you really want to save money, you've got to . . .
Have a financial advisor
Fly economy class
Invest in a Roth IRA
Live on less than you make
The only place you should keep your emergency fund money is...
An envelope in a safe place
A Roth IRA
A savings account or money market account.
A safe in your bedroom
If people saved the equivalent of a car payment each month for a year or two (instead of spending it on payments and interest), they could have enough money to buy a car with cash for much cheaper!
True
False
Which two habits are the most important for building wealth and becoming a millionaire?
Consistently investing money and patience to give it time to grow
Working a high-paying job and relying on a trust fund
Always paying off your credit card on time and putting extra money into a retirement account
Investing into the right stocks and using a private CPA
The interest rate on a savings account determines . . .
How quickly your money will grow over time
How much money you need to have to open the account
The amount of time your money will be in the account
How much you will pay the bank to manage the account
Debt is a tool to use to make you wealthy.
True
False
You should budget in this order: giving, savings, spending.
True
False
______ is a millionaire's best friend.
Profit sharing
Accrued interest
High returns
Compound growth
The purpose of an emergency fund is to . . .
Teach you discipline—saving is purely a good exercise in self-control.
Have some extra money in a checking account in case you need to transfer some to your spending categories.
Be able to cover an unexpected expense with cash and protect you from having to pile up debt when something goes wrong.
Teach you how to invest in growth stock mutual funds.
Why do stores rarely advertise the full price of big purchases like smartphones?
They are trying to cheat you.
They are trying to keep their prices competitive.
By showing you only the monthly payment, they make the product seem affordable.
Hiding the full price allows stores to change their pricing as the market fluctuates.
Compound interest is earned at a fixed rate, while _______ is an average based on an investment's past performance.
The Fifth Foundation
Interest rate
The principal
Compound growth
What is the goal of an emergency fund?
To save for your children's college expenses
To have cash on hand for unexpected events
To pay for large purchases
. To pay for health insurance
The main reasons for saving your hard-earned money are . . .
Paying for your dream home, buying your dream car, and going on your dream vacation
Buying gifts, donating to charities, and building up a college fund for your kids
Emergencies, large purchases, and wealth building
Investing, indulging, and influencing
Once you're out of school, have started your career, and have zero debt, your emergency fund should have ________ .
$3000
3–6 months of living expenses
$5000
3–6 months of income
What is the Third Foundation?
Create a monthly budget.
Pay cash for your car.
Pay cash for college.
Save for retirement.
