Questions and Answers
47% of Americans have less than $1,000 saved for a(n) ________.
Emergency
You'll have less freedom with your money if you...
Are paying for things in your past
Once you have a $500 emergency fund, you should...
Save it until you have an emergency
The first step you should take when you want to make a large purchase is...
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The best way to build wealth is to start investing early. You should start investing money...
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Why do some accounts, like savings accounts at your local bank, earn interest?
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It's not IF an emergency will happen, but ______.
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If you really want to save money, you've got to...
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The only place you should keep your emergency fund money is...
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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!
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Which two habits are the most important for building wealth and becoming a millionaire?
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The interest rate on a savings account determines...
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Debt is a tool to use to make you wealthy.
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You should budget in this order: giving, savings, spending.
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_______ is a millionaire's best friend.
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The purpose of an emergency fund is to...
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Why do stores rarely advertise the full price of big purchases like smartphones?
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Compound interest is earned at a fixed rate, while _______ is an average based on an investment's past performance.
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What is the goal of an emergency fund?
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The main reasons for saving your hard-earned money are...
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Once you're out of school, have started your career, and have zero debt, your emergency fund should have ______.
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What is the Third Foundation?
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The top three careers reported among millionaires were:
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In order to outpace inflation when investing, your investments need to have a lower rate of return than the rate of inflation.
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While saving money isn't easy at first, it will make your life a lot ________ in the future if you make it a habit now.
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Most millionaires make over $100,000 a year.
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Which of these would count as a legitimate reason to use your emergency fund?
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The amount of interest charged on a debt but not yet collected is called...
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One of the main reasons we build wealth is so that we can...
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Which principle says that a certain amount of money today is worth more than the same amount in the future?
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Study Notes
Emergency Fund and Savings
- 47% of Americans have less than $1,000 saved for emergencies.
- The purpose of an emergency fund is to cover unexpected expenses without accruing debt.
- Emergencies will happen, making preparation essential.
- Once a $500 emergency fund is established, it should remain untouched until an emergency arises.
Financial Freedom and Spending
- Freedom with money decreases when paying for past expenses.
- Living on less than earned is crucial for saving money and building wealth.
Investment and Wealth Building
- Start investing after college, being debt-free, and having 3-6 months of living expenses saved.
- Consistent investing and patience are vital for building wealth and becoming a millionaire.
- The interest rate on savings accounts affects the speed of money growth.
Debt and Budgeting
- Debt is not a tool for wealth; it should be avoided.
- Budgeting should follow the order of giving, savings, and then spending.
Large Purchases and Financial Habits
- Decide the savings amount and time frame before making large purchases.
- Saving the equivalent of a car payment each month can enable purchasing a car with cash, reducing overall expenses.
Millionaire Insights
- Common careers among millionaires include accounting, engineering, and teaching.
- Most millionaires do not earn over $100,000 per year.
Financial Principles and Concepts
- Compound growth is a millionaire's best friend, encouraging long-term investment strategies.
- The time value of money indicates the current value of money is greater than its future value.
- Accrued interest refers to interest that is charged on debt but not yet collected.
Emergency Fund Usage
- Legitimate reasons to use an emergency fund can include unforeseen issues like a dead car battery.
- The goal of an emergency fund is to maintain cash reserves for unexpected events, ensuring financial security.
Savings Goals
- Reasons for saving include handling emergencies, preparing for large purchases, and wealth building.
- Establishing a saving habit can simplify financial management in the long run.
Studying That Suits You
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Description
Test your knowledge on Dave Ramsey's financial principles in Chapter 3 with these flashcards. Learn about emergency funds and financial freedom concepts crucial for budgeting and saving. Perfect for anyone looking to improve their financial literacy.
