Chapter 3 Assessment Practice

45% of Americans have less than $1,000 saved for a(n)

• Car

• Emergency

• New smartphone

• Retirement fund

You'll have less freedom with your money if you ..

• Invest in the stock market

• Are paying for things in your past

• Make less than $35,000

• Put money in a bank account

Once you have a $500 emergency fund, you should ...

• Invest it in the stock market to grow your money

• Start putting it toward debt

• Use the money to pay for health insurance

• Save it until you have an emergency

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 in

• Get a new credit card

• Sell something and use the proceeds

• Ask your parents to loan you the money with low interest

The best way to build wealth is to start investing early. You should start investing money...

• Once you're out of college, living debt-free, and have 3–6 months of living expenses saved

• When the stock market is performing really well

• Once you have a fully funded emergency fund

• As soon as you have extra cash

Why do some accounts, like savings accounts at your local bank, earn interest?

• Because of inflation

• Because those accounts always have great interest rates

• Because the bank pays you to use your money

• Because you deposit money, adding to your principal each month

The only place you should keep your emergency fund money is...

• A savings account or money market account.

• A safe in your bedroom

• A Roth IRA

• An envelope in a safe place

Which two habits are the most important for building wealth and becoming a millionaire?

• Working a high-paying job and relying on a trust fund

• Always paying off your credit card on time and putting extra money into a retirement account

• Investing into the right stocks and using a private CPA

• Consistently investing money and patience to give it time to grow

The interest rate on a savings account determines . . .

• How much money you need to have to open the account

• How much you will pay the bank to manage the account

• The amount of time your money will be in the account

• How quickly your money will grow over time

___________________________ is a millionaire's best friend.

• Accrued interest

• Compound growth

• High returns

• Profit sharing