WorksheetsPF Ch.3 Quiz
Total questions: 30
Worksheet time: 15mins
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 toward 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
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
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.
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
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
Murphy’s Law applies to saving money in which of the following ways?
Unexpected expenses can arise, making it important to save for emergencies.
Saving money guarantees that nothing will go wrong.
Murphy’s Law suggests that saving money is unnecessary.
Saving money prevents all financial problems from occurring.
Planning and saving for your future helps you build wealth by:
Allowing your money to grow over time through investments and savings.
Encouraging you to spend all your money now.
Making it harder to achieve financial goals.
Preventing you from having any financial security.
Making payments on a car is considered a poor financial decision because:
You end up paying more due to interest and depreciation.
It increases your credit score significantly.
It guarantees the car will increase in value.
It eliminates all maintenance costs.
The main differences between saving and investing are:
Saving is for short-term goals and safety, while investing is for long-term growth and involves risk.
Saving always gives higher returns than investing.
Investing is risk-free, while saving is risky.
Saving and investing have no differences.
