The Color Of Money

Question 0

That color is when you take the risky route of using credit—spending money you don’t have? _______ expenditures. Credit can be a lifesaver in the real world where things often go wrong and unexpected expenses arise. Using a credit card occasionally, and paying it off in a timely manner, builds a good credit rating, which is part of sound financial management. But you always need to remember that money spent on credit is money you will, sooner or later, have to pay back—with interest and finance charges tacked on. In other words replacing a one-foot pile of ____ money may take a two-foot stack of green money.

Answer 0

Red money

Question 1

What is the color when what you spend is the same as or less than the income you have for immediate cash needs and security spending? Grocery purchases, car payments, insurance premiums, and health insurance payments are ______ expenditures—assuming you have the income to cover them.

Answer 1

Green money

Question 2

What is money set aside as an emergency cash reserve? Rainy-day money you should forget about until the car breaks down or the toilet over- flows. While your ____ fund should draw some interest, since you’ll probably have it in a bank or credit union savings account, the return will be modest. That’s because you need it where you can grab it on short notice.

Answer 2

Gray money

Question 3

What is aimed at the distant, _____ horizon of your retirement plans or the day when you build your dream home. ____ funds, invested in long-term certificates of deposit, mutual funds, a managed securities portfolio, or, in some situations, real estate, is money at work. Leave it alone. Let it do its work until, one sunny day, you can cash it in as retirement income or as the extra money you need for building that cottage on the lake.

Answer 3

Blue money