CHAPTER 2 - Savings

Name _____________________

ASSESSMENT REVIEW GUIDE

Directions: Use your notes, workbook, and chapter handouts to answer the following questions. These
questions are very similar to the questions you will find on your chapter exam.
1. What are Five Foundations? (pg. 32)
2. Which is correct according to Dave Ramsey? (Chap. 1, pg. 12)
Money management is...
_____ 80% Knowledge and 20% Behavior
or
_____ 80% Behavior and 20% Knowledge
3. What are THREE reasons why you should save money? (pg. 32)
1. _________________

2. ___________________ 3. ________________________

4. What is a good reason to use the money in your Emergency Fund? _________________ What is a
bad/poor reason to use the money in your emergency fund? __________________
5. What kind of money decisions does someone have to make if they don't have an emergency fund and
they experience an emergency? (pg. 34)
6. If you get a flat tire should you use money out of your SINKING FUND or EMERGENCY FUND
repair it? (pg. 36)
7. Interest paid on interest is called ______________________. (pg. 41)
8. It is important to save for retirement, but that is not the first thing you should save for according to
Dave Ramsey. Why?
What is the first thing you should save for? (pg. 36)

9. We learned about brothers Ben and Arthur to help us understand a certain principal of saving. One of
the brothers, Ben, started saving early, the other, Arthur, started saving later. What TWO factors helped
Ben, "out save" his brother? (pg. 40 & 43)
10. Dave Ramsey recommends setting up a _______________Fund and save money for an item you'd
like to purchase rather than buying it on credit. (pg. 37) Why?

11. It is recommended that you save $____________ in your Emergency Fund if you are a teenager.
(pg. 36)

12. If you are using the Sinking Fund approach to saving for large purchases and are saving $600 for a
vacation in 6 months, how much do you need to save each month? (pg. 37)

13. Why should adults save 3-6 months in what's called a "fully funded" emergency fund when
teenagers only need a $500 emergency fund? (pg. 34/36)

14. Why should your emergency fund be kept separate from the money you use for regular
spending/purchases? (pg. 34)

15. Why isn't it important for your Emergency Fund to earn high interest rates in an investment? (pg.
36)

16. Explain the following terms:

Time value of money (pg. 42)

interest (pg. 41)

inflation (pg. 42)

compound interest (pg. 41)

sinking fund (pg. 30/37)

17. What personal character traits do people need to become good at saving money? (Hint: pg. 38 see
Zig Ziglar's quote in the margin)
18. If you were to give a friend tips to start managing his/her money more wisely, what tips would you
give that you've learned in class so far?