WorksheetsCh 3 Test - Saving Money
Total questions: 35
Worksheet time: 2hrs 45mins
45% of Americans have less than $1,000 saved for a(n) ________.
New smartphone
Retirement fund
Emergency
Car
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 . . .
Use the money to pay for health insurance
Save it until you have an emergency
Invest it in the stock market to grow your money
Start putting it toward debt
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
Decide how much you'll need to save and the time frame you want to save it in
Get a new credit card
Sell something and use the proceeds
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're out of college, living debt-free, and have 3–6 months of living expenses saved
When the stock market is performing really well
Once you have a fully funded emergency fund
Why do some accounts, like savings accounts at your local bank, earn interest?
Because the bank pays you to use your money
Because those accounts always have great interest rates
Because of inflation
Because you deposit money, adding to your principal each month
It's not IF an emergency will happen, but _______.
Why
When
How
Where
If you really want to save money, you've got to . . .
Fly economy class
Live on less than you make
Have a financial advisor
Invest in a Roth IRA
The only place you should keep your emergency fund money is…
A Roth IRA
A savings account or money market account
A safe in your bedroom
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
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 on time and putting extra money into a retirement account
Investing into the right stocks and using a private CPA
Consistently investing money and giving it time to grow
The interest rate on a savings account determines . . .
The amount of time your money will be in the account
How much money you need to have to open the account
How quickly your money will grow over time
How much you will pay the bank to manage the account
Debt is a tool to use to make you wealthy.
True
False
You should budget in this order: giving, savings, spending.
True
False
________ is a millionaire’s best friend.
Accrued interest
Profit sharing
High returns
Compound growth
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.
Teach you discipline—saving is purely a good exercise in self-control.
Have some extra money in a checking account in case you need to transfer some to your spending categories.
Why do stores rarely advertise the full price of big purchases like smartphones?
They are trying to cheat you.
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.
Compound interest is earned at a fixed rate, while ________ is an average based on an investment's past performance.
Interest rate
Compound growth
The Fifth Foundation
The principal
What is the goal of an emergency fund?
To pay for large purchases
To save for your children's college expenses
To pay for health insurance
To have cash on hand for unexpected events
The main reasons for saving your hard-earned money are . . .
Investing, indulging, and influencing
Buying gifts, donating to charities, and building up a college fund for your kids
Paying for your dream home, buying your dream car, and going on your dream vacation
Emergencies, large purchases, and wealth building
Once you're out of school, have started your career, and have zero debt, your emergency fund should have ________.
$3,000
$5,000
3–6 months of income
3–6 months of living expenses
What is the Third Foundation?
Save for retirement.
Create a monthly budget.
Pay cash for your car.
Pay cash for college.
The top three careers reported among millionaires were ________, ________, and ________.
Lawyers; surgeons; accountants
Accountants; engineers; teachers
Artists; scientists; musicians
Celebrities; developers; writers
Pro athletes; bankers; CEOs
In order to outpace inflation when investing, your investments need to have a lower rate of return than the rate of inflation.
False
True
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.
Longer
Harder
Poorer
Easier
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?
Your car battery died
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
The amount of interest charged on a debt but not yet collected is called . . .
Accrued interest
Interest rate
Growth rate
Same-as-cash
One of the main reasons we build wealth is so that we can . . .
Impress the people around us
Spend it all on ourselves
Prove that we are successful
Give to those in need
Which principle says that a certain amount of money today is worth more than the same amount in the future?
Rate of return
The time value of money
Principal interest
Inflation
Which of the following is NOT true about emergency funds?
They help remove the worry about expenses not in the budget.
They are used for anything listed on the budget.
They help you prepare for unexpected expenses.
They can keep you from borrowing money from friends and family.
Which of the following is an effective strategy for personal saving?
Save a certain percentage of each paycheck and deposit it directly into a savings account.
Cover all of your wants and needs and save whatever is left over.
Take out a payday loan so you can save before you receive your paycheck.
Wait until the end of the month and save whatever is left in your checking account.
Why is it important to have a diversified savings strategy?
To ensure all money is in one place.
To increase risk.
To reduce risk and increase potential returns.
To avoid saving money.
What is the recommended percentage of income to save for retirement?
10%
15%
25%
5%
What is a good strategy to help you save?
Keep your spending and saving money together in 1 account.
Tap into your savings on a regular basis to purchase small items, like snacks.
1st, spend money on all expenses; put the rest into saving.
Pay yourself first - set aside money for savings each month.
