| A | B |
|---|
| Compound Interest | Interest paid on interest previously earned, credit daily, monthly, quarterly, or semiannually. |
| Interest Rate | Percentage paid to a lender for the use of borrowed money (in debt); percentage earned on invested principle (in investing) |
| Emergency fund | $500 in readily available cash to be used only in the event of an emergency; the goal of the first foundation |
| Five foundations | The five steps to financial success are 1. Save $500 for emergency fund 2. Get out of Debt 3. Pay Cash for a Car 4. Pay Cash for College 5. Build Wealth and Give |
| Sinking fund | Saving money over time for a large purchases |
| What are the Five Foundations, In order? | 1. Save $500 for emergency fund 2.Get out of Debt 3.Pay Cash for your car 4.Pay Cash for college 5. Build Wealth and Give |
| What is a sinking Fund? | A fund or savings account where you set money aside instead of borrowing money for large purchases |
| What does it mean to have a negative savings rate? | Spending more money than you make and acquiring debt |
| The saving habits of Ben and Arthur best illustrate which principle of saving? | The Principle of: 1. Rate of Return 2. Length of time money is invested matters |
| What is the Time Value of Money? | The Value of money is change by time and inflation. The amount of money today has different buying power than the same amount of money in the future. |
| What are the three main reasons a person should save? | 1. Purchases 2. Emergency fund 3. Building Wealth |
| 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 |
| For students under 18, a fully funded emergency fund should be what? | $500 |
| What are the Keys to saving? | Discipline, Making savings a habit and priority, and focusing on saving |
| What are some reasons people do not save? | They lack discipline, They lack focus, and They do not live on a budget. |
| What are the three basic reasons for saving? | Emergency Fund, Large Purchases, Building Wealth. |
| Why should your emergency fund be kept in a separate savings account | 1. So you don’t confuse your spending and savings 2. So it is not easy to access 3. So your emergency fund savings can earn interest. |
| Saving is about_____? | Contentment and emotion |
| Why should interest earned not be a factor with your emergency fund? | The emergency fund is not intended to grow wealth |
| True or False: The first thing you should save for is your retirement fund? | False |
| True or False: Your income level greatly affects your savings habit? | False |
| True or False: Americans typically maintain a very high savings rate | False |
| True or False: You should save money for three basic reasons: emergency fund, purchases, and wealth building | True |
| True or False: 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 your spending is done? | False |
| True or False: When you’re older and out of school, you emergency fund should be a full three to six months’ worth of expenses | True |
| True or False: You should keep your emergency in the same account as your spending money? | False |
| True or False: An interest-bearing account is an account that generates interest income on the available balance in the account | True |
| True or False: When you are in high school, you will not have the same emergency expenses as your parents? | True |
| True or False: You should hold off on investing for retirement until you have college or other post secondary education paid for? | True |
