Dave Ramsey Personal Finance Chapter 2 Questions with Verified Solutions

Dave Ramsey Personal Finance Chapter 2 Questions with Verified Solutions What is the first foundation in Dave's 5 foundations? Save $500 in an emergency fund Some people borrow money for large purchases, but we know that we should set our money aside in a ________________ over time and then pay for the big purchase in cash. Sinking Fund Spending more money than you make & acquiring debt Negative savings rate Money today has different buying power than the same amount of money in the future Time Value of Money What are 3 things that you should save for? Purchases, Wealth Building & Emergency Fund Using the sinking fund approach, how much do you have to save each month to buy a $4,800 car one year from now? $400 At your age, what is the amount that your emergency fund should have at all times? $500 What is not a key factor to saving money? Your income The savings habit of _______ best illustrate the length of time money is invested matters & rate of return matters. Ben & Arthur What are reasons people don't save money? Lacking focus, discipline, & choosing not to live on a budget Saving money to lend it to your friends is very important and Dave Ramsey approves of this. False What is NOT a reason to have your emergency funds in a separate account from your normal funds? So that you know for sure what money can ONLY be used in an emergency situation. The emergency fund is set aside to HELP you in ________________ financial situations Unexpected financial situations What 2 things is saving really about? Contentment & emotion The emergency fund is meant to be there if you need it, but you should know that it is.... NOT there to Grow Wealth Saving for your retirement should be your top priority. False The amount of income you have directly effects your savings habits. False Generally speaking, Americans are not good at saving money True The amount you you save is decided by what you have left after you do all of your spending. False Once you graduate, you should have a FULL ____________ months of funds set aside in your emergency fund. 3-6 months