WorksheetsPerson Finance Chp 3 Pretest
Total questions: 26
Worksheet time: 13mins
45% of Americans have less than $1,000 saved for a(n) _______.
emergency
car
retirement fund
new iphone
Why do some accounts, like savings accounts at your local bank, earn interest?
Because you deposit money, adding to your principle each month
Because the bank pays you to use your money
Because of inflation
Because those accounts always have great interest rates
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
Makes less than $35,000
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
When you are out of college, living debt-free, and have 3-6 months of living expenses saved
When the stock market is performing really well
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 need to save and the time frame you need to save it in
sell something and use the proceeds
Once you have a $500 emergency fund you should...
Start putting it toward debt
save it until you have an emergency
invest it in the stock market to grow your money
use the money to pay for health insurance
It's not IF an emergency will happen, but....
when
why
where
how
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
how much money you will pay the bank to manage the account
the amount of time your money will be in the account
Which two habits are most important for building wealth and becoming a millionaire?
working a high paying job and relying on a trust fund
investing into the right stocks and using a private CPA
consistently investing money and giving it time to grow
always paying off your credit card on time and putting extra money into a retirement account
If people saved the equivalent of a car payment each month for a year or two (instead of spending it on payment and interest), they could have enough money to buy a car with cash for much cheaper.
TRUE
FALSE
The only place you should keep your emergency fund money is...
an envelope in a safe place
a Roth IRA
a safe in your bedroom
a savings account or money market account
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 purpose of an emergency fund is to...
teach you discipline-saving is purely an exercise in self control
teach you how to invest in growth stock mutual funds
have some extra money in your 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
Compound interest is earned at a fixed rate, while ________is an average based on an investment's past performance.
compound growth
the fifth foundation
interest rate
principle
Debt is a tool you can use to make you wealthy.
TRUE
FALSE
_______ is a millionaire's best friend.
profit sharing
high returns
compound growth
accrued interest
Why do stores rarely advertise the full price of big purchases like smart phones?
by showing you only the monthly payment, they make the product seem affordable
hiding the full price allows stores to change their price as the market fluctuates
they are trying to keep their prices competitive
they are trying to cheat you
You should budget in this order: giving, saving, spending
TRUE
FALSE
What is the Third Foundation?
create a monthly budget
save for retirement
pay cash for college
pay cash for your car
The main reasons for saving your hard-earned money are....
investing, indulging, influencing
emergencies, large purchases, wealth building
buying gifts, donating to charities, building up a college fund for your kids
paying for your dream home, buying your dream car, paying for your dream vacation
The top three careers reported among millionaires were...
accountants, engineers, teachers
celebrities, developers, writers
lawyers, surgeons, accountants
pro athletes, bankers, CEO's
What is the goal of an emergency fund?
to pay for large purchases
to save for your children's college
to have cash on hand for unexpected events
to pay for health insurance
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
$3000
$5000
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 amount of interest charged on a debt but not yet collected is called...
growth rate
same as cash
interest rate
accrued interest
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 the money in your Clothing category
you forgot to budget for your mom's birthday gift
the smartphone you want just went on sale
you car battery died
