Dave Ramsey: CH 1 Flashcards
30 Questions
123 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What involves making the right choices with your money?

Earning, budgeting, saving, spending, and giving affect your money

Banks got into the credit business before 1920 because charging exceptionally high interest rates was legal.

True (A)

You should always make sure you have a...

Budget

To gain an understanding of your personal finances, you should know...

<p>Where you stand financially, how much income you have, what goals you want to set, and how you'll reach those goals</p> Signup and view all the answers

What is the first foundation?

<p>Save a $500 emergency fund</p> Signup and view all the answers

Being a spender has many more positives than being a saver.

<p>False (B)</p> Signup and view all the answers

Personal finance is all the financial decisions a(n) __________ must make in order to earn, budget, save, spend, and give money over time.

<p>Individual or company</p> Signup and view all the answers

After WW1, why did credit increase so rapidly?

<p>Loan sharks became obsolete</p> Signup and view all the answers

A money principle to keep in mind is to live on _________ you make.

<p>Exactly 20% what</p> Signup and view all the answers

To know your net worth, subtract your liabilities from your__________.

<p>Net income</p> Signup and view all the answers

What is financial literacy?

<p>The knowledge and skills base necessary for people to be informed consumers and manage their finances effectively</p> Signup and view all the answers

Savers have a tendency to be...

<p>Strict with purchases for only themselves</p> Signup and view all the answers

What is the best way to avoid running out of money too quickly?

<p>You can make it a habit to plan and set goals for your money</p> Signup and view all the answers

What was the purpose of the New Deal passed by FDR?

<p>To promote economic recovery and social reform</p> Signup and view all the answers

An important money principle to consider is that you should _______________ and ________________ your money.

<p>save; invest</p> Signup and view all the answers

If your assets total more than your liabilities, you will have a(n) ______________ net worth.

<p>Negative</p> Signup and view all the answers

What are the 5 foundations?

<p>A personal financial action plan</p> Signup and view all the answers

Your money personally impacts....

<p>How you handle money</p> Signup and view all the answers

What does living paycheck to paycheck mean?

<p>Living paycheck to paycheck is an expression used to describe a situation when someone eagerly awaits their next paycheck to plan for the month's expenses</p> Signup and view all the answers

In 1972, what association made borrowing money to attend college much easier than it had been?

<p>The Student Loan Marketing Association (SLMA)</p> Signup and view all the answers

Without any debt, you can be outrageously _____________

<p>cautious</p> Signup and view all the answers

When you set financial goals, they should be...

<p>Specific, measurable, time-sensitive, yours, and written</p> Signup and view all the answers

It is possible to pay for college with cash.

<p>True (A)</p> Signup and view all the answers

As a single adult, you should...

<p>Keep managing your money as a priority</p> Signup and view all the answers

Personal finance is 20% _________ and 80%_________________

<p>behavior; head knowledge</p> Signup and view all the answers

Using credit has not always been a socially accepted practice, but it has become...

<p>Necessary for life in America</p> Signup and view all the answers

Avoiding debt can lead to financial freedom and hope.

<p>True (A)</p> Signup and view all the answers

A ______________ financial goal takes up to two years to reach.

<p>short-term</p> Signup and view all the answers

What is the 5th foundation?

<p>Build wealth and give</p> Signup and view all the answers

You are either only a natural saver or a natural spender. You cannot have a balance of both.

<p>False (B)</p> Signup and view all the answers

Flashcards

Budget

A plan that outlines how you earn, spend, save, and give your money.

Net worth

The difference between what you own (assets) and what you owe (liabilities).

Financial literacy

Knowing how to manage your money wisely, like budgeting, saving, and investing.

Financial goals

Setting specific, measurable, achievable, relevant, and time-bound goals for your finances.

Signup and view all the flashcards

Financial resilience

The ability to weather financial storms and bounce back from challenges.

Signup and view all the flashcards

Emergency fund

An amount of money saved for unexpected expenses, like car repairs or medical bills.

Signup and view all the flashcards

Living paycheck to paycheck

A cycle of depending on each paycheck to cover monthly expenses, with little or no savings.

Signup and view all the flashcards

Credit

A way to borrow money, often used to finance large purchases like cars or homes.

Signup and view all the flashcards

Interest rate

The amount of interest charged on a loan, which can vary depending on the lender and the loan type.

Signup and view all the flashcards

Loan shark

A type of credit that is offered at exceptionally high interest rates.

Signup and view all the flashcards

Financial freedom

Financial freedom means not being ruled by debt and having the means to pursue your goals.

Signup and view all the flashcards

Personal finance is 20% knowledge, 80% behavior

The idea that personal finance is primarily about behavior and implementing what you know.

Signup and view all the flashcards

Short-term financial goals

Goals that you aim to achieve within two years.

Signup and view all the flashcards

Long-term financial goals

Goals that you aim to achieve in the long term, beyond two years.

Signup and view all the flashcards

Cash-paying for college

Paying for college using cash, savings, or scholarships, without relying on loans.

Signup and view all the flashcards

Giving back

The act of giving back to your community or charitable causes.

Signup and view all the flashcards

Spending

The practice of carefully monitoring and managing your expenses.

Signup and view all the flashcards

Saving

Setting aside money for future needs, like retirement or a down payment.

Signup and view all the flashcards

Saver

A mindset that prioritizes saving and careful spending.

Signup and view all the flashcards

Spender

A mindset that prioritizes spending and enjoying the present.

Signup and view all the flashcards

Student Loan Marketing Association (SLMA)

An organization that simplifies the borrowing process for students seeking financial assistance for college.

Signup and view all the flashcards

Student loans

Loans taken out to finance education, often used for college expenses.

Signup and view all the flashcards

Debt

The practice of borrowing money and accumulating debt.

Signup and view all the flashcards

Financial security

A way to be financially secure, even when unexpected events occur.

Signup and view all the flashcards

Balancing saver and spender

The idea that it's possible to be both a saver and a spender, finding a balance between the two.

Signup and view all the flashcards

Social acceptance of Credit

Society's increasing acceptance of using credit as a normal part of life.

Signup and view all the flashcards

Study Notes

Money Management Basics

  • Effective money management requires understanding earning, budgeting, saving, spending, and giving.
  • Establishing a budget is essential for successful financial management.

Historical Context of Credit

  • Prior to 1920, banks entered the credit sector legally charging high interest rates.
  • Post-WWI credit access grew, leading to the decline of loan sharks as credit options expanded.

Personal Finance Fundamentals

  • Assess personal finances by knowing current financial status, income, and goal-setting methods.
  • The first foundation of financial health is saving a $500 emergency fund.
  • Financial literacy encompasses the skills and knowledge for informed consumer behavior and efficient finance management.

Saving and Spending Insights

  • Savers tend to be more stringent about personal expenditures compared to spenders.
  • It's a myth that being a spender has more advantages than being a saver.

Financial Goals and Net Worth

  • Financial resilience can be achieved by habitually planning and establishing financial goals.
  • Positive net worth occurs when assets exceed liabilities.
  • Goals should be specific, measurable, time-bound, personalized, and documented.

College Financing and Debt

  • The Student Loan Marketing Association (SLMA), established in 1972, significantly simplified borrowing for college students.
  • Paying for college with cash is a feasible option.
  • Living paycheck to paycheck refers to a cycle of depending on the next paycheck for monthly expenses.

Financial Freedom and Behavior

  • Avoiding debt is crucial for achieving financial freedom and maintaining hope.
  • Personal finance is 20% knowledge and 80% behavioral practice; understanding this balance is key.
  • Debt avoidance can greatly enhance financial security and peace of mind.

Goal Setting in Finance

  • Short-term financial goals take up to two years to achieve.
  • Building wealth and giving back constitutes the fifth foundation of financial security.

Misconceptions in Personal Finance

  • It is possible to balance traits of a saver and a spender; there is no strict dichotomy.
  • Social acceptance of credit has evolved, making it a perceived necessity in modern American life.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Description

Test your understanding of financial principles with these flashcards based on Chapter 1 of Dave Ramsey's material. This quiz covers essential concepts like budgeting, saving, and the workings of banks in the credit business. Perfect for reinforcing key ideas about money management.

More Like This

Use Quizgecko on...
Browser
Open
Browser
Browser