Chapter Three Flashcards
A recent study shows that ___ of Americans couldn’t cover a $400 financial emergency without going into debt
36%
In fact, 45% of Americans have less than _____ saved for an emergency.
$1,000
14% of Americans have ___ saved.
0%
Emergency Fund:
a savings account set up specifically to be used to cover financial emergencies
Large Purchase:
a purchase that requires a significant amount of money
Three reasons to save:
emergencies, large purchases, and wealth building.
___ of millionaires said they live on less than they make.
94%
___ of millionaires say they plan and save in advance for big expenses—compared to 67% of the general population.
95%
The first foundation
saving a $500 emergency fund
___ of Americans don’t feel they would be able to cover a $400 emergency
36%
A purchase is worth the emergency fund if
it is unexpected, necessary, and urgent.
The third foundation:
save cash for your car
Interest rate:
the percentage of principal charged by the lender for the use of its money
Accrued Interest:
the amount of interest charged on a debut but not yet collected; interest accumulates from the date a loan is issued
Compound growth:
the average rate of growth for an investment over time; often expressed as an annual figure,
__ of Americans have nothing saved for retirement,
25%
Compound interest:
interest paid on interest previously earned
Principal:
the initial amount of money invested or borrowed.
Rate of return:
the measure of an investments profit or loss, usually expressed as a percentage of the initial investment
Inflation
the persistent rise in the cost of goods and services over time.
Time Value of Money:
concept that an amount of money is worth more today than in the future due to earning potential.
