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47% of Americans have less than $1,000 saved for a(n).
A. Emergency
B. Car
C. Retirement fund
D. New smartphone
A. Emergency
Once you have a $500 emergency fund, you should . . .
A. Start putting it toward debt
B. Invest it in the stock market to grow your money
C. Save it until you have an emergency
D. Use the money to pay for health insurance
C. Save it until you have an emergency
If you really want to save money, you've got to . . .
A. Fly economy class
B. Live on less than you make
C. Invest in a Roth IRA
D. Have a financial advisor
B. Live on less than you make
_________ is a millionaire's best friend.
A. Accrued interest
B. Compound growth
C. High returns
D. Profit sharing
B. Compound growth
What is the Third Foundation?
A. Pay cash for your car.
B. Pay cash for college.
C. Save for retirement.
D. Create a monthly budget.
A. Pay cash for your car.
You'll have less freedom with your money if you . . .
A. Invest in the stock market
B. Are paying for things in your past
C. Put money in a bank account
D. Make less than $35,000
B. Are paying for things in your past
The best way to build wealth is to start investing early. You should start investing money . . .
A. Once you have a fully-funded emergency fund
B. Once you're out of college, living debt-free, and have 3–6 months of living expenses saved
C. When the stock market is performing really well
D.As soon as you have extra cash
B. Once you're out of college, living debt-free, and have 3–6 months of living expenses saved
Why do some accounts, like savings accounts at your local bank, earn interest?
A. Because you deposit money, adding to your principal each month
B. Because the bank pays you to use your money
C. Because those accounts always have great interest rates D.
Because of inflation
B. Because the bank pays you to use your money
The only place you should keep your emergency fund money is...
A. A savings account or money market account
B. A safe in your bedroom
C. A Roth IRA
D.An envelope in a safe place
A. A savings account or money market account
Compound interest is earned at a fixed rate, while is an average based on an investment's past performance.
A. The principal
B. Interest rate
C. The Fifth Foundation
D. Compound growth
D. Compound growth
The first step you should take when you want to make a large purchase is . . .
A. Ask your parents to loan you the money with low interest
B. Get a new credit card
C. Decide how much you'll need to save and the time frame you want to save it in
D. Sell something and use the proceeds
C. Decide how much you'll need to save and the time frame you want to save it in
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!
A. True
B. False
A. True
In order to outpace inflation when investing, your investments need to have a lower rate of return than the rate of inflation.
A. True
B. False
B. False
The interest rate on a savings account determines . . .
A. How much money you need to have to open the account
B. How much you will pay the bank to manage the account
C. The amount of time your money will be in the account
D. How quickly your money will grow over time
D. How quickly your money will grow over time
Why do stores rarely advertise the full price of big purchases like smartphones?
A. They are trying to keep their prices competitive.
B. Hiding the full price allows stores to change their pricing as the market fluctuates.
C. By showing you only the monthly payment, they make the product seem affordable.
D. They are trying to cheat you.
C. By showing you only the monthly payment, they make the product seem affordable.
The purpose of an emergency fund is to . . .
A. Be able to cover an unexpected expense with cash and protect yourself from having to pile up debt when something goes wrong.
B. Teach you how to invest in growth stock mutual funds.
C. Have some extra money in a checking account in case you need to transfer some to your spending categories.
D. Teach you discipline—saving is purely a good exercise in self-control.
A. Be able to cover an unexpected expense with cash and protect yourself from having to pile up debt when something goes wrong.
The main reasons for saving your hard-earned money are . . .
A. Emergencies, large purchases, and wealth-building
B. Paying for your dream home, buying your dream car, and going on your dream vacation
C. Buying gifts, donating to charities, and building up a college fund for your kids
D. Investing, indulging, and influencing
A. Emergencies, large purchases, and wealth-building
What is the goal of an emergency fund?
A. To pay for large purchases
B. To save for your children's college expenses
C. To have cash on hand for unexpected events
D. To pay for health insurance
C. To have cash on hand for unexpected events
Once you're out of school, have started your career, and have zero debt, your emergency fund should have...
A. 3–6 months of income
B. 3–6 months of living expenses
C. $3,000
D. $5,000
B. 3–6 months of living expenses
The top three careers reported among millionaires were ______, ______, and ______.
A. Pro athletes; bankers; CEOs
B. Lawyers; surgeons; accountants
C. Celebrities; developers; writers
D.Accountants; engineers; teachers
D.Accountants; engineers; teachers
Which of these would count as a legitimate reason to use your emergency fund?
A. You forgot to budget for your mom's birthday gift
B. You have a fancy event coming up but you already spent all of your Clothing budget category
C. The smartphone you've wanted just went on sale
D. Your car battery died
D. Your car battery died
The amount of interest charged on a debt but not yet collected is called . . .
A. Accrued interest
B. Interest rate
C. Same-as-cash
D. Growth rate
A. Accrued interest
Which two habits are the most important for building wealth and becoming a millionaire?
A. Working a high-paying job and relying on a trust fund
B. Always paying off your credit card on time and putting extra money into a retirement account
C. Investing in the right stocks and using a private CPA
D. Consistently investing money and patience to give it time to grow
D. Consistently investing money and patience to give it time to grow
One of the main reasons we build wealth is so that we can . . .
A. Give to those in need
B. Spend it all on ourselves
C. Impress the people around us
D. Prove that we are successful
A. 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?
A. Inflation
B. Rate of return
C. The time value of money
D. Principal interest
C. The time value of money