Money Management Guide: Savings & Emergency Fund
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Questions and Answers

What is the recommended amount of your paycheck to put into savings?

  • 30%
  • 20% (correct)
  • 10%
  • 40%

    • What is the purpose of an emergency fund?

  • To spend immediately
  • To cover unexpected life events (correct)
  • To save for a vacation
  • To invest in stocks

    • What distinguishes credit unions from commercial banks?

  • For-profit nature and low savings rates
  • Online-only transactions
  • Non-profit nature and high loan rates (correct)
  • Convenient locations and limited services

    • How do online-only institutions differ from traditional banks?

    <p>Higher interest rates (B)</p> Signup and view all the answers

    What is the concept of 'pay yourself first' in money management?

    <p>Putting money into savings before spending on bills (D)</p> Signup and view all the answers

    Which type of depository institution aims to make a profit?

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

    What is the purpose of the FDIC and NCUA?

    <p>To provide protection to financial accounts in case of a bank or credit union failure (C)</p> Signup and view all the answers

    What is the key characteristic of a savings account?

    <p>Safe and reliable for short-term cash storage (A)</p> Signup and view all the answers

    What is the main difference between electronic payments and writing a check?

    <p>Checks involve physically writing an order to the bank, while electronic payments are done online (B)</p> Signup and view all the answers

    What feature distinguishes Money Market Accounts (MMAs) from other accounts like savings accounts?

    <p>MMAs have variable interest rates and require a minimum balance (B)</p> Signup and view all the answers

    What is the primary characteristic of a Certificate of Deposit (CD) compared to savings accounts?

    <p>CDs lock in money for a fixed period with penalties for early withdrawal (B)</p> Signup and view all the answers

    What is the key motivation for individuals to invest in Certificates of Deposit (CDs) rather than traditional savings accounts?

    <p>Higher interest rates on CDs as an incentive for lost liquidity (C)</p> Signup and view all the answers

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