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personal finance 2
| Term | Definition |
|---|---|
| How does Murphy’s law apply to saving money? | Because you should always be ready for anything unexpected to happen so saving money will make sure that you're always ready for anything to happen |
| How does planning and saving help you build wealth? | Planning and saving help build wealth by providing a structured approach to money management that enables individuals to control expenses, pay down debt, establish emergency funds, and strategically invest for long-term growth. |
| What are three questions to ask yourself before you spend your emergency fund? | Is it unexpected, necessary, or urgent |
| Explain why making payments on a car could be a poor financial decision. | cars are rapidly depreciating assets, meaning they lose significant value quickly, and the total cost of the loan can be much higher than the car's value due to interest charges |
| Explain how Jack ended up with more money than Blake | Because he started sooner and let compound interest work for him |
| Why should you avoid interest rate deals such as the 0% interest rate? | because they can encourage overspending, have hidden costs like inflated prices, and may lead to a loss of the promotional rate if you miss a payment |
| What is the main difference between saving and investing? | The main difference is that saving is for short-term goals with low risk and low returns, while investing is for long-term goals with higher risk and potential for higher returns |
| 45% of Americans have less than $1,000 saved for a(n) | Emergency Fund |
| An investment's____ is its percentage of gain or loss over time. | Rate Of Return |
| _____is the average rate of growth for an investment over a period of time. | Compound growth |
| The price of goods and services increases over time due to_____ . | Inflation |
| The initial amount of money you deposit or invest is called the | principal |
| You save for a(n) _____ when you don‘t have the cash to buy it now. | large purchase |
| ______deals—such as 90-days-same-as-cash—are often used to get you to buy higher-priced items. | Interest Rate |
| The____refers to the earning potential of money. | Time Value Of Money |
| A great principle for saving money is, “Start paying yourself and | Investing in your future |
| The First Foundation is: Save | a $500 emergency fund |
| f you make a late credit payment, you might see the lender add | an accrued interest to what you owe |
| The three reasons to save money are | emergencies, large purchases, and building wealth |
| Which of the following would be considered an emergency fund expense? | Blown car tire |
| ”Rate of return“ is a phrase used to describe what aspect of investing? | Compound Growth |
| In The Five Foundations, what is The Third Foundation? | Pay cash for your car |
| When you make a purchase but later wish you hadn‘t done so, you experience: | Buyer's Remorse |
| Which of the following questions helps you determine if something is actually an emergency expense? | all of the above |
| What two elements do you need to build wealth through compound growth? | Money invested and time |
Created by:
wethadi27