Family Finance Exam 1
Terms in this set (41)
It is recommended that you maintain a fully funded emergency fund equal to 3-4 months' expenses
Because an emergency fund is an investment, maximizing the interest rate of return on the account is an important consideration
For the most part, baby step one requires funding an emergency fund in the amount of $1200 (twelve months times $100)
According to your instructor, your written cash flow plan should be allocated on a weekly or bi-weekly basis
Failure to have a written cash flow plan contributes to "management by crisis"
Frequent money fights indicate that a couple is not actually following their written cash flow plan
You need to reconcile your bank statement once every year
The most powerful cash flow plan is a zero based plan using an envelop system
An envelop system should be used to manage utility costs such as electricity, water, and phone
A zero based plan means that the cash flow plan is based on having a zero debt
Dave Ramsey strongly recommends that you NOT use ATM and debit cards
Your written budget should include a plan to blow your money (i.e., blow money)
Having zero debt is an important component of a zero based budget
Your emergency fund should be thought of as insurance, not an investment
Which of the following expenditures would NOT be included in a lump-sum repayment plan
significant home repairs, major medical expenses, summer vacations, Christmas gifts
Dave Ramsey recommends ___% of your income be spent on housing
if your home mortgage rate is 8% and the inflation rate is 6%, how many years will it take for your home (i.e., house) to double in value
Dave Ramsey identifies seven baby steps you should take to reach financial success. Baby step three is to
put 3-6 months of expenses in savings
Which one of the following was not one of the tips Dave Ramsey provides to help you stick to your budget
you must pay cash for everything
What percentage of American workers have less than $1000 in savings
Mary wants to have her car note ($2400) paid off when she graduates in 22 months. According to our class discussion, Mary's goal to pay off her car would represent what?
A short-term goal
Dave Ramsey identifies seven baby steps you should take to reach financial success. Baby step 1 is to
begin emergency fund
What percentage of college students eventually leave school because of financial concerns
Dave Ramsey recommends __% of your income be spent on charitable gifts
If you have $5,000 in savings earning 4% interest and inflation rate is 8%, how many years will it take for you to have $10,000 accumulated in savings
Dave Ramsey identifies seven baby steps you should take to reach financial success. Baby step two is:
pay off all debt other than your home mortgage
The annualized costs of items paid on a non-monthly basis would most likely be included in
your lump-sum payment plan
Many people believe that winning the lottery could happen to them; however, according to our class discussion on odds you will win the lottery are approximately one in ___
Hopefully, this class will give you the money management skills needed to avoid living paycheck to paycheck. According to the Wall street journal, ____% of consumers actually live paycheck to paycheck
Hopefully, one of your financial goals is to maintain a savings account sufficient to cover an unexpected emergencies. According to CNN Money, ___% of Americans have no savings at all, no retirement, no investments, nothing
If inflation is at 8%, how many years will it take for the price of groceries to double?
When Tim's son was born, he invested $5000 in a college savings fund to pay for little Johnny's future education expenses. According to our class discussion, what three variables will determine that future value of Johnny's college savings fund
Steve and Wanda are serious about managing their money well and have decided to develop a written plan to achieve their financial goals. According to our class discussion, what four guidelines would you recommend to help Steve and Wanda develop effective financial goals
1. Realistic: based on your income and life situation
2. Specific: stated in specific, measurable terms, since having exact goals will help you create a plan to achieve them
3. Time Specific: based on a time frame, such as a goal to be achieved in three years. A time frame helps you measure your progress toward your financial goals
4. Action oriented: because your financial goals are the basis for the various financial activities you will undertake
What is the difference in the future value of an amount invested in savings and the future value of an annuity invested in savings
the future value of an amount invested in savings is dependent on 3 factors. These factors are time, rate, and compounding. The future value of annuity has to do with a periodic series of payment.
According to Horace, "He will always be a ____, he who does not know how to live upon a ___"
You should save money for three basic reasons:
1. For an (emergency) fund
2. For building (wealth)
3. To make (purchases)
Samuel Johnson said, "Resolve not to be ___; whatever you have, ___ less."
Because of social pressure and advertising, you may end up buying what you think you ___, rather than what you really ___.
The mathematical explosion most closely associated with the time value of money is referred to as
You can never get enough of what you do not need, because what you do not need can never ___ you.
Nothing (no thing) is more important than