personal finance: unit 4

For most people, a fully-funded emergency fund will be about:

10,000-15,000

how many baby steps are there

7

Dave's 80/20 rule says that when it comes to money, 80% is head knowledge and 20% is behavior. T/F

False

Your income level greatly affects your savings habits. T/F

False

next step after having fully funded emergency fund

Invest 15% of your income into Roth IRAs and pre-tax retirement plans

stands for Pre-Authorized Checking and helps build discipline when saving

PAC's

Interest is money paid to a saver by a financial institution. T/F

True

Money is neither good nor bad

amoral

Baby step 1 is to get $1,000 into the bank Baby step 2 is to work the debt snowball, Baby step 3 is to finish the emergency fund Baby step 4 is invest.

baby steps

Interest on interest

compound interest

According to Dave Ramsey, __________ is the key ingredient for wealth building.

discipline

The emergency fund is not a big ___.

earner

According to Dave Ramsey, saving money is about ______ and ______.

emotion and contentment

You should invest 10% of your household income into Roth IRAs and pre-tax retirement plans.

false

Interest (I) = Principal(P) X Rate(R) X Time(T)

formula for simple interest

Emergency Fund goes here

money market

The typical American has a ____ savings rate.

negative

The percentage by which your money grows is called the ___.

rate of return

what is baby step 1?

save 1,000 in emergency fund

Baby Steps 1 and 3 have to do with:

saving and emergency fund

Saving money for a purchase and letting the interest work for you rather than against you

sinking fund approach

how much should you save to fully fund your emergency fund (baby step 3)

three to six months worth of expenses

Pre-authorized checking helps to build discipline in saving. T/F

true

The annual interest rate does matter when making a one time investment.

true

When you pay with cash, you can almost always negotiate a better deal.

true

you should save for

wealth building, emergency fund and purchases

three reasons you should save

wealth building, purchases, emergency fund