WorksheetsFinancial Foundations Quiz
Total questions: 44
Worksheet time: 39mins
Which of the following steps is the First Foundation?
Get out of debt
Build wealth and give
Save a $500 emergency fund
Pay cash for your car
Instead of borrowing money for large purchases, you should set money aside in a ________ over time and pay with cash.
Emergency fund
Sinking fund
Credit card fund
Mortgage fund
What does it mean to have a negative savings rate?
Saving for something that is a want instead of a need
Having a fully funded emergency fund
Having no savings at all
Spending more money than you make and acquiring debt
The saving habits of Ben and Arthur best illustrate which principle of saving?
The length of time money is invested matters.
The amount of the initial investment is the key.
Rate of return matters.
Both length of time and rate of return matter
This principle suggests that a certain amount of money today has different buying power than the same amount of money in the future. This is due to both the opportunity to earn interest on the money and because inflation will drive prices up, thereby changing the ʺvalueʺ of the money.
Opportunity cost
Time value of money
Interest rate
Inflation
For which of the following should you save?
Purchases
Wealth building
Emergency fund
All of these
Using the sinking fund approach, how much do you have to save each month to buy a $4,800 car one year from now?
$400
$300
$275
$500
At your age, a fully funded emergency fund should be:
$500
$5,000
$100
$1,000
Which of these is not a key to saving money?
Focus
Making saving a habit and a priority
Your income
Discipline
Which of the following is a reason that people donʹt save money?
They lack discipline
They do not live on a budget
They lack focus
All of these
Which of the following is not one of the three basic reasons for saving money?
Emergency fund
Large purchases
Have money available to lend to friends
Build wealth
Which of the following is not a reason your emergency fund should be kept in a separate savings account away from your spending money?
So that you do not get your spending and saving money confused.
So that it is clear what money is only to be used for emergencies.
So that it is not too easy to access.
So that your emergency fund savings can earn a lot of interest.
Why is having a fully funded emergency fund so important when it comes to your financial well-being?
As long as you have a good-paying job, you really donʹt need an emergency fund.
The purpose of an emergency fund is to set money aside for unexpected financial emergencies and to provide a sense of financial security.
The purpose of an emergency fund is to have money set aside for large purchases, like vacations.
None of these
Saving is about:
Contentment and emotion
Contentment and earning more money
Making more money and discipline
Pride and greed
Why should interest earned not be a factor with your emergency fund?
Inflation can eat up the interest earned.
Interest-bearing accounts at banks earn a high rate of interest, therefore, interest is not a concern.
The emergency fund is not intended to grow wealth.
None of these
The first thing you should save for is your retirement fund. True/False
(a)
Your income level greatly affects your saving habits. True/False
(a)
Americans typically maintain a very high savings rate. True/False
(a)
You should save money for three basic reasons: emergency fund, purchases and wealth building. True/False
(a)
When it comes to saving money, the amount you save is determined by how much you have left at the end of the month once all of your spending is done. True/False
(a)
When youʹre older and out of school, youʹll need to grow your emergency fund into a full three to six monthsʹ worth of expenses. True/False
(a)
You should keep your emergency fund in the same account as your spending money. True/False
(a)
An interest-bearing account is an account that generates interest income on the available balance in the account. True/False
(a)
When youʹre in high school, you wonʹt have the same emergency expenses as your parents. True/False
(a)
You should hold off on investing for retirement until you have college or other post-secondary education paid for. True/False
(a)
What two things do you consider when evaluating the time value of money?
What are the essential elements of wealth building?
Why do you need an emergency fund at your age?
List and describe each of the Five Foundations.
Explain why establishing an emergency fund should be your first savings priority before large purchases and wealth building.
Calculate the compound interest for each problem below. Assume interest is compounded annually: $1,000 at 6% interest for three years
(a)
Calculate the compound interest for each problem below. Assume interest is compounded annually: $500 at 18% interest for four years
(a)
Calculate the compound interest for each problem below. Assume interest is compounded annually: $1,500 at 12% interest for two years
(a)
What is the First Foundation? Explain how and why the dollar amount will change as you get older.
Money set aside and left alone for a ʺrainy day.ʺ ( (a) )
Saving money over time for a large purchase ( (a) )
Percentage paid to a lender for the use of borrowed money, or the percentage earned on invested principal (a) )
Money today has different buying power than the same amount of money in the future ( (a) )
Interest paid on interest previously earned ( (a) )
Compares after-tax income to the money people spend on a variety of items ( (a) )
The five steps to financial success ( (a) )
Save a $500 emergency fund ( (a) )
When a person intentionally invests money in a place where it can earn more money ( (a) )
The persistent rise in the cost of goods and services ( (a) )
