WorksheetsSaving - Study Guide
Total questions: 25
Worksheet time: 13mins
Name
Class
Date
1.
1. Hargus saved $1,000 from his summer job cleaning pools. Which of these account types would work best for him if he doesn't need access to the money for a number of years AND wants to earn the highest interest rate?
a)
Regular savings account
b)
Money Market account
c)
Checking account
d)
Certificate of Deposit
2.
2. Which of the following is an effective strategy for personal saving?
a)
Wait until the end of the month and save whatever is left in your checking account
b)
Save a certain percentage of each paycheck and deposit it directly into a savings account
c)
Cover all of your wants and needs and save whatever is left over
d)
Take out a payday loan so you can save before you receive your paycheck
3.
3. Which of the following is FALSE about saving and investing?
a)
Saving doesn't outpace inflation; investing usually does
b)
Investing generally have higher returns
c)
Saving is for short-term; investing is for the longer-term
d)
Saving has more risk; investing has less risk
4.
4. All of the following statements about bank accounts are true EXCEPT…
a)
If the bank is FDIC-insured, your money, up to the FDIC limit, is safe even if the bank fails
b)
Many banks pay interest on the money you deposit into your savings account
c)
Historically, savings accounts earn higher returns than investments in the stock market
d)
Money in a checking account is usually easy to access via ATM, debit card or check
5.
5. You are developing a savings plan and using short-, medium-, and long-term goals to motivate you. Which represents possible goals from short-term to long-term? Save for…
a)
Retirement, a house down payment, college tuition
b)
A new cell phone, college tuition, a house down payment
c)
A new cell phone, dinner with friends this weekend, a new bike
d)
Retirement, college tuition, a vacation
6.
6. What is a general rule of thumb about how much you should save?
a)
5% of your disposable income
b)
10% of your disposable income
c)
20% of your disposable income
d)
30% of your disposable income
7.
7. Fill in the blanks with the correct responses. If you follow the 50-30-20 rule of budgeting, you'll be putting 50% of your monthly income toward _______________, 30% of your monthly income toward _____________, and 20% of your monthly income toward ______________.
a)
Needs, wants, savings
b)
Savings, needs, wants
c)
Needs, savings, wants
d)
Wants, needs, savings
8.
8. Which represents the BEST time to start saving for your retirement?
a)
As soon as you have your first full-time job
b)
Right after you pay off your student loans
c)
Once you are debt-free, including paying off all credit cards, auto loans, and your mortgage
d)
At age 45, so you have exactly 20 years until retirement
9.
9. Which of the following statements is TRUE?
a)
The majority of Americans have an adequate emergency fund
b)
The majority of Americans have sufficient amounts of money saved for retirement
c)
The majority of Americans have an adequate emergency fund, but do NOT have sufficient amounts of money saved for retirement
d)
The majority of Americans do NOT have an adequate emergency fund or sufficient amounts of money saved for retirement
10.
10. Experts recommend that you accumulate enough to cover 3 to 6 __________________ of expenses in your emergency fund.
a)
Days
b)
Weeks
c)
Months
d)
Years
11.
11. Which of these is a reason someone might choose to open an online savings account rather than a savings account at a traditional bank?
a)
Online savings accounts are FDIC insured to a higher limit
b)
Online savings accounts typically pay higher interest rates on deposits
c)
Online savings accounts are less likely to make you the victim of identity theft
d)
Online savings accounts are created specifically for people under age 25
12.
12. Three of these statements best describe a checking account. Which statement best describes a savings account?
a)
This account offers a convenient way to pay bills and access cash from an ATM
b)
This account pays you interest on money you have put away for later to help your money grow
c)
This account is automatically debited when you use a debit card
d)
This account typically allows an unlimited number of transactions per month
13.
13. You overhear your Aunt Kahlyn tell your mom that she, her husband, and their kids are "living paycheck to paycheck." What does Aunt Kahlyn mean by that?
a)
Aunt Kahlyn gets a paycheck one month, and her husband gets a paycheck the next month; they alternate pay periods
b)
Aunt Kahlyn and her family don't have any money saved, and their paychecks are just barely covering monthly expenses
c)
Aunt Kahlyn and her family have high paying jobs and don’t worry much about money
d)
Aunt Kahlyn only receives paper paychecks instead of direct deposit
14.
14. How is compound interest different than simple interest?
a)
It is simple interest - interest earned on that interest
b)
It is double the simple interest earned on an investment
c)
It is simple interest + interest earned on that interest
d)
It's not different; they are one and the same
15.
15. Fill in the blanks: If inflation is _____________ your savings account interest rate then you will be ______________ purchasing power.
a)
Higher than, gaining
b)
Higher than, losing
c)
Equal to, gaining
d)
Lower than, losing
16.
16. FDIC Insurance is...
a)
Optional coverage consumers can purchase so that their bank deposits remain safe
b)
Insurance bank branches can buy to protect their business against fraud and scams
c)
Required if you want to do online or mobile banking
d)
Protection for bank customers’ deposits up to $250,000, guaranteeing their money is still available if the bank goes out of business
17.
17. Which is true about Certificates of Deposit (CD's)
a)
You agree to keep money in a CD for an undetermined time period
b)
You pay the bank some interest to keep money in the CD
c)
The bank can charge you a penalty if you withdraw your money before its maturity date
d)
The bank pays you lower interest CD's than traditional savings account.
18.
18. True or False: You need a checking account to open a savings account.
a)
True
b)
False
19.
19. What might you need to open a savings account?
a)
A state issued photo ID
b)
Your parents most recent tax return
c)
Your most recent grade transcript
d)
A checking account routing number
20.
20. How is wealth defined?
a)
By your material possessions
b)
By your bank account balances
c)
By your family name
d)
By taking all your assets (possessions, account balances, etc.) and subtracting all your debts (Loans, mortgages, credit card balances etc.)
21.
21. Which type of deposit account is primarily designed for frequent transactions?
a)
Savings Account
b)
Money Market Account (MMA)
c)
Checking Account
d)
Certificate of Deposit (CD)
22.
22. Why might someone choose a Certificate of Deposit (CD) over a savings account?
a)
Need for frequent access to funds
b)
Ability to write checks
c)
Higher interest rates
d)
Lower minimum balance requirements
23.
23. What is the primary function of the Federal Reserve's Discount Rate?
a)
To set the interest rates for savings and certificate of deposit accounts
b)
To control the amount of reserves banks hold
c)
To set the interest rate for banks borrowing short-term funds
d)
To determine the inflation rate
24.
24. Why is it important to consider inflation when analyzing an investment return?
a)
Because inflation increases the value of money over time.
b)
Because inflation guarantees a higher return on investments since prices will be higher in the future.
c)
Because inflation has no effect on long-term investments.
d)
Because inflation decreases the purchasing power of money over time.
25.
25. Why is prioritizing paying off high-interest debt important in saving strategies?
a)
It allows you to save less each month after the debt is paid off.
b)
Paying more on high-interest debt guarantees a higher credit score.
c)
It reduces the total amount of interest paid over time.
d)
It ensures you will not have to pay off low-interest debt.
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