WorksheetsPersonal Finance Chapter 3 Test - Ramsey Classroom
Total questions: 37
Worksheet time: 20mins
45% of Americans have less than $1,000 saved for a(n) ____.
Emergency
Car
Retirement fund
New smartphone
You'll have less freedom with your money if you...
Invest in the stock market
Are paying for things in your past
Put money in a bank account
Make less than $35,000
Once you have a $500 emergency fund, you should...
Start putting it towards debt
Invest it in the stock market to grow your money
Save it until you have an emergency
Use the money to pay for health insurance
The first step you should take when you want to make a large purchase is...
Ask your parents to loan you the money with low interest
Get a new credit card
Decide how much you'll need to save and the time frame you want to save it in
Sell something and use the proceeds
The best way to build wealth is to start investing early. You should start investing money...
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
As soon as you have extra cash
Why do some accounts, like savings accounts at your local bank, earn interest?
Because you deposit money, adding to your principal each month
Because the bank pays you to use your money
Because those accounts always have great interest rates
Because of inflation
It's not IF an emergency will happen, but ____.
How
Where
Why
When
If you really want to save money, you've got to...
Fly economy class
Live on less than you make
Invest in a Roth IRA
Have a financial advisor
The only place you should keep your emergency fund money is...
A savings account or money market account
A safe in your bedroom
A Roth IRA
An envelope in a safe place
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?
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
Consistently investing money and patience to give it time to grow
The interest rate on a savings account determines...
How much money you need to have to open the account
How much you will pay the bank to manage the account
The amount of time your money will be in the account
How quickly your money will grow over time
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.
Accrued interest
Compound growth
High returns
Profit sharing
The purpose of an emergency fund is to...
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.
Have some extra money in a checking account in case you need to transfer some to your spending categories
Teach you discipline, saving is purely a good exercise in self-control
Why do stores rarely advertise the full price of big purchases like smartphones?
They are trying to keep their prices competitive
Hiding the full price allows stores to change their pricing as the market fluctuates
By showing you only the monthly payment, they make the product seem affordable
They are trying to cheat you
Compound interest is earned at a fixed rate, while ____ is an average based on an investment's past performance.
The principal
Interest rate
The Fifth Foundation
Compound growth
What is the goal of an emergency fund?
To pay for large purchases
To save for your children's college expenses
To have cash on hand for unexpected events
To pay for health insurance
The main reasons for saving your hard-earned money are...
Emergencies, large purchases, and wealth building
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
Investing, indulging, and influencing
Once you're out of school, have started your career, and have zero debt, your emergency fund should have ____.
3-6 months of income
3-6 months of living expenses
$3,000
$5,000
What is the Third Foundation?
Pay cash for your car
Pay cash for college
Save for retirement
Create a monthly budget
The top three careers reported among millionaires were ____, ____, and ____.
Pro athletes; bankers; CEOs
Lawyers; surgeons; accountants
Celebrities; developers; writers
Accountants; engineers; teachers
In order to outpace inflation when investing, your investments need to have a lower rate of return than the rate of inflation.
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.
Easier
Harder
Poorer
Longer
90% of millionaires make over $100,000 a year.
True
False
Which of these would count as a legitimate reason to use your emergency fund?
You forgot to budget for your mom's birthday gift
You have a fancy event coming up but you already spent all of your Clothing budget category
The smartphone you've wanted just went on sale
Your car battery died
The amount of interest charged on a debt but not yet collected is called...
Accrued interest
Interest rate
Same-as-cash
Growth rate
One of the main reasons we build wealth is so that we can...
Give to those in need
Spend it all on ourselves
Impress the people around us
Prove that we are successful
Which principle says that a certain amount of money today is worth more than the same amount in the future.
Inflation
Rate of return
The time value of money
Principal interest
SHORT ANSWER QUESTION: How does Murphy's Law ("anything that can go wrong will go wrong") apply to saving money?
When you don't make a plan to save money, you're inviting trouble. So when you run into tough spots, like a flat tire that needs to be replaced, you won't have money saved to cover the issue.
When you don't make a plan to save money, you're ease. So when you run into tough spots, like a flat tire that needs to be replaced, you won't have money saved to cover the issue.
When you don't make a plan to save money, you're inviting trouble. So when you run into tough spots, like a flat tire that needs to be replaced, you kind of have money saved to cover the issue.
SHORT ANSWER QUESTION: How does planning and saving for your future help you build wealth?
Becoming a millionaire does happen overnight. It take patience, and the key is to start saving as soon as possible. Most millionaires do make a $1 million a year and they're just really good at saving.
Becoming a billionaire does happen overnight. It take patience, and the key is to start spending as soon as possible. Most billionaires do make a $1 billion a year, they're really good at spending.
Becoming a millionaire doesn't happen overnight. It take patience, and the key is to start saving as soon as possible. Most millionaires don't make a $1 million a year, they're just really good at saving.
Becoming a millionaire doesn't happen overnight. It take frustration, and the key is to start spending as soon as possible. Most millionaires don't make a $1 million a year, they're just really good at saving.
SHORT ANSWER QUESTION: What are three questions to ask yourself before you spend your emergency fund?
Is it expected? Is it a want? Is it needed?
Is it unexpected? Is it necessary? Is it facile?
Is it unexpected? Is it necessary? Is it urgent?
Is it unexpected? Is it needed? Is it urgent?
SHORT ANSWER QUESTION: Explain why making payments on a car is such a poor financial decision?
The average monthly payment is around $500, a car's value goes down like a rock! With interest, I'll end up paying far more for my car than I initially bargained for. At that point, I could have saved and payed cash for a good car!
The average monthly payment is around $500, a car's value goes down like a rock! With interest, I'll end up paying far more for my car than I initially bargained for. At that point, I could have saved and payed credit for a good car!
The average monthly payment is around $500, a car's value goes up! With interest, I'll end up paying far less for my car than I initially bargained for. At that point, I could have spent more money for a car!
The average monthly payment is around $500, a car's value goes down like a rock! With interest, I'll end up paying far more for my car than I initially bargained for. At that point, I could have my money on something of more value!
SHORT ANSWER QUESTION: Think back to the story of Jack and Blake. Explain how Jack ended up with more money in his investment account by the time he retired, when Blake invested more money.
I remember the story about Jack and Blake!! And I can explain why it all Jack made more!!
WHO!? I don't remember hearing about this!
I kinda remember the story but I can't answer any questions about it.
I have no idea what this question wants.
ESSAY QUESTION: Why should you avoid interest rate deals like zero-percent interest?
What even is a zero-percent interest deals?!
I have no idea, sounds like a good idea!
I kinda know why I should avoid it, but I need some you to explain why!
I know!! I can answer this with no problem!
I have to answer this with 3-5 sentences?!?!
ESSAY QUESTION: What are the main differences between saving and investing?
There really isn't a big difference at all!!
There's a difference?!
I know! I know! That's easy!
What?! How do I answer this in 3-5 sentences?!
