The Econ4U Savings Quiz

Financial insecurity in America is primarily the result of:

Americans’ low incomes compared to other nations.
Huge amounts of time and complex knowledge required for basic financial planning.
Low personal savings rates coupled with poor financial planning.
A shortage of financial planners and portfolio managers.
Please select an answer.

A “real world” savings account (or a rainy day fund) that pays interest is designed to cover which of the following?

Monthly rent payments
Buying gas to drive to and from work
Unexpected cost of repairing your car's transmission
Money for your retirement years
Please select an answer.

What is the purpose of your disposable income or net pay?

To pay taxes
To provide physical labor or services
To be consumed
To be saved, invested or consumed
Please select an answer.

Why should you save in an interest-bearing savings account?

So you can consume goods and services later and earn interest income while doing so
So you can consume goods and services immediately and actively use available credit
To get immediate gratification without financial concern for the future
To take advantage of investment opportunities in the stock market and earn high rates of return
Please select an answer.

How much your savings will grow depends on:

Time.
Amount saved.
Interest rates.
All of the above.
Please select an answer.

Which of the following best describes the power of compound interest with respect to saving in interest-bearing accounts?

Throwing a baseball into a strong wind that slows the speed of the pitch
A snowball rolling down a snow-covered mountain, growing in size as it descends
Watering your lawn while it is raining because it doubles the volume of your output
A penny dropped from the top of a very tall building, gathering speed as it falls
Please select an answer.

To take full advantage of earning compound interest income you should start saving:

Right now.
Three years from now.
As soon as you get a higher paying job.
After you have purchased the new car you wanted.
Please select an answer.

At the age of 25, you commit to stop buying a premium cup of coffee every day. Instead, you commit to placing the money in an interest-bearing savings account that yields 2 percent a year. How much can you plan on having at age 70? (Assume you commit to saving $4 per day, $28 a week or $112 a month.)

$1,344
$60,480
$69,000
$100,000
Please select an answer.

Which of the following provides a sound strategy for determining how much you should commit monthly to a “real world” savings account?

Total your unexpected expenditures over the last month and allocate this amount into the savings account regularly
Total your unexpected expenditures over the last year, divide this figure by 12, and allocate this amount into a savings account regularly
Total your unexpected expenditures over the last 12 months, divide this figure by 12, and if this total is less than the additional amount you can borrow on your credit cards, you do not need a real world savings account
Total your unexpected expenditures during the last month, and if this total is greater than the additional amount you can borrow on your credit cards, you do not need a real world savings account
Please select an answer.

Which of the following is the most strategic approach to saving?

Save when you have a little extra cash
Start saving after you have purchased a new car or flat-screen TV
Save after paying all your bills
Automatically deposit a set amount of your net pay in a savings account
Please select an answer.