Vocabulary
the persistent rise in the cost of goods and services over time
Inflation
What does a 5.23% interest rate look like as a decimal?
0.0523
If an investment is compounded semi-annually, how many times a year is the account re-calculated?
2
How much money should you establish in your emergency fund as young adults/teens?
$500
The first foundation of Ramsey's curriculum says you should do what with $500?
Establish an emergency fund
a savings account set up specifically to be used to cover financial emergencies
Emergency Fund
What formula is used to calculate simple interest?
I=p*r*t
What is the formula utilized to calculate compound interest?
A=(1+(r/n))^(n*t)
Grayson needs to save enough money to pay for his $4959 trip to Europe. If he has 18 months to save for this trip, what should he be putting away each month to be able to pay in cash?
$275.50
What is Murphy's Law?
"If something can go wrong, it will."
the initial amount of money invested or borrowed
Principal
) If Michael invests $2000 in the bank at a rate of 5.5% for 6 years how much interest will he make?
$660 in interest
You invested $52,400 at 6% compounded annually for 5 years. What is your total return on this investment?
$70,123.02
Why do some accounts, like savings accounts at your local bank, earn interest?
Because the bank pays you to use your money
"Rate of Return" is a phrase used to describe what aspect of investing your funds?
Compound Growth
the measure of an investment’s profit or loss, usually expressed as a percentage of the initial investment
Rate of Return
Jessie invests $3345 in the stock market. Over the 3 years she has this invested she gets an average return of 7.8%. How much will her total investment be worth after the 3 years?
$4127.73
Your investment of $18,100 at 13.6% compounded quarterly for 7 1/2 years will be worth how much?
$49,350.86
Seth has created a college fund for tuition at MSU. Tuition costs $15,000 per year. If he plans to attend college for four years, how much should he plan to put away in his savings?
$60,000
Why is self-discipline the key to becoming a good saver?
Self-discipline drives ability to change habits and control spending
the percentage of principal charged by the lender for the use of its money
Interest Rate
Taylor has just won $4,250 from the 50/50 at the Sea Dog's game and decides to invest all of it. If he makes $1275 with a 5% interest rate, how long must he have had the money invested?
6 years
How is compound interest different from simple interest?
*Simple interest only makes money based on your principal
*Compound interest makes money on your principal and the accumulated interest
What are the three Ramsey reasons to save money?
1. Emergencies
2. Large Purchases
3. Wealth Building
What three questions must you answer before taking money from your emergency fund?
Is it necessary?
Is it urgent?
Is it unexpected?