Foundations in Personal Finance - Practice for Certificate Exam with complete solution
Compound Interest -Answer- Interest paid on interest previously earned
Emergency Fund -Answer- Five hundred dollars in readily
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Foundations in Personal Finance - Practice for Certificate Exam with complete solution
Compound Interest -Answer- Interest paid on interest previously earned
Emergency Fund -Answer- Five hundred dollars in readily available cash to be used only in the event of an emergency.
Interest rate -Answer- Percentage paid to a lender for the used of borrowed money or percentage earned on invested money.
Sinking Fund -Answer- Saving money over time for a large purchase.
Inflation -Answer- The persistant rise in the price of goods and services over a period of time.
Interest- Bearing Account -Answer- An account that generates interest income on the available balance in the account.
1st Foundation -Answer- Save $500
2nd Foundation -Answer- Get out of debt, and stay out of debt
3rd Foundation -Answer- Pay cash for a car (sinking fund)
4th foundation -Answer- Pay cash for college
5th foundation -Answer- Build wealth and give
Negative Savings Rate -Answer- Spending more money than you make and going into debt
2 components to saving -Answer- Time and rate of return
Time value of money -Answer- the idea that $100 today will not buy the same amount as in the future due to inflation and interest.
3 reasons to save -Answer- purchases, emergency fund, wealth building
Keys to saving -Answer- focus, making it priority and habit, discipline
People who don't save money -Answer- often lack focus and discipline, and have no budget
Why should emergency fund and spending money be kept separate -Answer- To make sure its only spent for emergencies and not as easy to access and spend it.
What is the purpose of fully funded emergency fund -Answer- To have money for unexpected financial emergencies
Saving should bring -Answer- contentment
Emergency Fund interest -Answer- Is not important because an emergency fund is not used to growth wealth
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