Personal Finance Chapter 2

Five foundations 1. $500 emergency fund2. pay off debt 3. pay for car with cash 4. pay for school with cash5. build wealth and give back (the five steps to financial sucess)
Interest rate rate at which is either charged (on debt) or paid (on investment accounts) for the use of money
sinking fund saving money over time for a large purchase
compound interest Interest paid on interest previously owned
Emergency fund a savings accout that is set aside to be used for emergency expenses only
Recession decline in economy
Inflation the persistent increase in the cost of goods and services or the persistant decline in the purchasing power of money
interest bearing account an account that generates interest income on the available balance in the account
When it comes to saving money, the amount you save is determined by how much you have left at the end of the month once all your spending is done false
your income level greatly influences your saving habits false
at your age a fully funded emergency fund should be $500
three reasons for saving money emergency fund large purchases bulid wealth
Ben vs Arthur time value of money
two things do you consider when evaluating the time vaule of money interest rate and inflation
Negative savings rate spend more than you earn
Time value money invested earlier
why do people not save they want money now

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