WorksheetsChapter 3 Savings
Total questions: 28
Worksheet time: 29mins
45% of Americans have less than $1,000 saved for a(n)
New smartphone
Emergency
Car
Retirement fund
You'll have less freedom with your money if you ..
Put money in a bank account
Make less than $35,000
Are paying for things in your past
Invest in the stock market
Once you have a $500 emergency fund, you should ...
New smartphone
Retirement fund
Start putting more money toward debt
Invest it in the stock market to grow your money
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
Use the money to pay for health insurance
Save it until you have an emergency
It's not IF an emergency will happen, but
When
Where
Save it until you have an emergency
Use the money to pay for health insurance
The best way to build wealth is to start investing early. You should start investing money...
Once you have a fully funded emergency fund
When the stock market is performing really well
As soon as you have extra cash
Decide how much you'll need to save and the time frame you want to save it in
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
If you really want to save money, you've got to...
Invest in a Roth IRA
Fly economy class
Live on less than you make
Have a financial advisor
The only place you should keep your emergency fund money is...
A Roth IRA
A savings account or money market account.
An envelope in a safe place
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!
Profit sharing
True
High returns
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 debt on time and putting extra money into a retirement account
Investing into the right stocks and using a private CPA
Consistently investing money and having the patience to give it time to grow
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 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 store rarely advertise the full price of big purchases like smartphones?
They are trying to keep their prices competitive
Hiding the full price allows the 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
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
In order to outpace inflation when investing, your investments need to have a lower rate of return than the rate of inflation.
True
False
Which of these would count as legitimate reasons to use your emergency fund?
You forgot to budget for your mom's birthday gift
You have a fancy event coming up but you have 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 in called...
Accrued interest
Interest rate
Same-as-cash
Growth rate
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
There is a truck for sale for $6,200 that Kendal wants to buy. If Kendal can save $350 each month, how long will it take Kendal to have enough money to purchase the truck?
About 12 months
About 18 months
About 22 months
About 36 months
Eli would like to purchase a set of tools that costs $750. Eli is hoping to have it in 3 months. How much must Eli save monthly to meet the goal?
$50
$80
$175
$250
Why do many Americans struggle to save money?
They don't make enough money to save
They don't believe in saving
They prefer to spend their money on immediate gratification
They don't know how to save
What are some downsides of not saving money?
Stress from unexpected expenses
Living paycheck to paycheck
Having to put off dreams
All of the above
What is the best way to handle emergencies?
Use debt to cover expenses
Rely on family and friends for financial help
Have money saved in the bank
Ignore the emergency and hope it goes away
What does Murphy's Law state?
Anything that can go wrong will go wrong
Saving money is essential for financial security
Debt is a useful tool for building wealth
You should always prioritize immediate gratification
What is the benefit of saving money?
Being able to afford travel and education
Building your dream home
Having financial security
All of the above
