CHAPTER 3 TEST

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

• EMERGENCY
• car
• retirement fund
• new smartphone

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

• Invest in the stock market
• Are paying for things in your past
• Put money in a bank account
• Make less than $35,000

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

• Start putting it toward debt
• Invest it in the stock market to grow your money
• Save it until you have an emergency
• Use the money to pay for health insurance

The first step you should take when you want to make a large purchase is . . .

• Ask your parents to loan you the money with low interest
• Get a new credit card
• Decide how much you'll need to save and the time frame you want to save it in
• Sell something and use the proceeds

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

• Once you have a fully funded emergency fund
• 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
• As soon as you have extra cash

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

• Because you deposit money, adding to your principal each month
• Because the bank pays you to use your money
• Because those accounts always have great interest rates
• Because of inflation

It's not IF an emergency will happen, but .

• How
• When
• Why
• Where

If you really want to save money, you've got to . . .

• Fly economy class
• Live on less than you make
• Invest in a Roth IRA
• Have a financial advisor

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

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!

• TRUE
• FALSE