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Financial Literacy - Ch 3 - Saving Flashcards | StudBud
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Financial Literacy - Ch 3 - Saving
Financial Literacy - Ch 3 - Saving
30 terms
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StudBud Administration
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New Ramsey Classroom Curriculum
Flashcards
30 cards
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Practice quiz
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Host live
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Questions
30
Answers
1
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
EASIER
POORER
HARDER
2
Compound interest is earned at a fixed rate, while ________ is an average based on an investment's past performance.
The Fifth Foundation
Compound Growth
Interest Rate
The principal
3
The main reasons for saving your hard-earned money are...
Paying for your dream home, buying your dream car, dream vacation
Investing, indulging, influencing
Buying gifts, donating to charities, building up college fund for your kids
Emergencies, large purchases and wealth building
4
The interest rate on a savings account determines . . .
How much you will pay the bank to manage the acct
How quickly your money will grow over time
How much $ you need to have to open the acct
The amount of time your money will be in the acct
5
You'll have less freedom with your money if you . . .
PUT MONEY IN A BANK ACCOUNT
ARE PAYING FOR THINGS IN YOUR PAST
INVEST IN THE STOCK MARKET
MAKE LESS THAN $35,000
6
Why do stores rarely advertise the full price of big purchases like smartphones?
Hiding the full price allows stores to change pricing as market fluctuates
They are trying to keep their prices competitive
By only showing you the monthly pymt they make the product seem affordable
They are trying to cheat you
7
Once you have a $500 emergency fund, you should . . .
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
START PUTTING IT TOWARD DEBT
8
One of the main reasons we build wealth is so that we can . . .
Spend it all on ourselves
Impress the people around us
Give to those in need
Prove that we are successful
9
The best way to build wealth is to start investing early. You should start investing money . . .
WHEN THE STOCK MARKET IS PERFORMING REALLY WELL
ONCE YOU HAVE A FULLY FUNDED EMERGENCY FUND
ONCE YOU'RE OUT OF COLLEGE, LIVING DEBT-FREE AND HAVE 6 MO EMERGENCY FUND
AS SOON AS YOU HAVE EXTRA CASH
10
Once you're out of school, have started your career, and have zero debt, your emergency fund should have _________.
3-6 months of living expenses
$5000
3-6 months of income
$3000
11
You should budget in this order: giving, savings, spending.
True
False
12
The top three careers reported among millionaires were _____________, _____________, and ___________.
accountants; engineers; teachers
Pro athletes; bankers; CEO's
Celebrities; developers; writers
Lawyers; surgeons; accountants
13
The only place you should keep your emergency fund money is..
a safe in your bedroom
A ROTH IRA
A SAVINGS ACCT OR MONEY MARKET ACCOUNT
AN ENVELOPE IN A SAFE PLACE
14
Most millionaires make over $100,000 a year.
True
False
15
The purpose of an emergency fund is to...
Have some extra $ in checking incase you need to transfer
Teach you discipline - saving is self-control
Teach you how to invest in growth stock mutual funds
Be able to cover unexpected exp and protect you from debt
16
If you saved the $ each month for 1-2 yrs you could have enough $ to buy a car with cash for much cheaper - no interest!
True
False
17
Which two habits are the most important for building wealth and becoming a millionaire?
Always pay off your credit card on time and put extra $into retirement acct
Investing in the right stocks and using a private CPA
Working a high $ job and rely on a trust fund
Consistently investing money and patienct to give it time to grow
18
_______ is a millionaire's best friend.
Profit Sharing
High Returns
Compound growth
Accrued interest
19
The first step you should take when you want to make a large purchase is . . .
DECIDE HOW MUCH YOU'LL NEED TO SAVE AND THE TIME FRAME YOU WANT TO SAVE IT
GET A NEW CREDIT CARD
ASK YOUR PARENTS TO LOAN YOU THE MONEY WITH LOW INTEREST RATES
SELL SOMETHING AND USE THE PROCEEDS
20
Which of these would count as a legitimate reason to use your emergency fund?
Your car battery died
You forgot to budget your mom's birthday gift
The smartphone you want just went on sale
You have an event coming up but you already spent your budgeted Clothing $
21
What is the Third Foundation?
Pay Cash for your car
Save for retirement
Pay cash for college
Create a monthly budget
22
In order to outpace inflation, your investments need to have a lower rate of return than the rate of inflation.
True
False
23
It's not IF an emergency will happen, but _______.
WHERE
WHEN
WHY
HOW
24
47% of Americans have less than $1,000 saved for a(n) _______
RETIREMENT FUND
NEW SMARTPHONE
EMERGENCY
CAR
25
If you really want to save money, you've got to . .
LIVE ON LESS THAN YOU MAKE
FLY ECONOMY CLASS
HAVE A FINANCIAL ADVISOR
INVEST IN A ROTH IRA
26
Which principle says that a certain amount of money today is worth more than the same amount in the future?
Inflation
The time value of money
Rate of Return
Principal interest
27
Why do some accounts, like savings accounts at your local bank, earn interest?
Because those accounts always have great interest rates
Because the bank pays you to use your money
Because of inflation
Because you deposit money, adding to your principal each month
28
Debt is a tool to use to make you wealthy.
False
True
29
The amount of interest charged on a debt but not yet collected is called...
Accrued Interest
Interest Rate
Same-as-cash
Growth Rate
30
What is the goal of an emergency fund?
To pay for large purchases
To have cash on hand for unexpected events
To save for your children's college expenses
To pay for Health Insurance
