Money Essentials

1. What's the most important first step to take towards achieving your financial goals?
    Contribute regularly to an IRA or 401(k).
    Work hard so you'll get promoted to a better job.
    Figure out which goals are achievable and worth striving for.
    Put yourself on a tight budget to get spending under control.
2. Financial planners generally stress the importance of starting to save and invest early. What's the main reason why?
    Because it helps build good habits that will last a lifetime.
    Because of the power of compounding and appreciation.
    Because you generally don't have as many bills to pay when you are young as when you are older.
    Because it means you'll need the services of a financial planner for longer in your life.
3. Two people save money in a tax-deferred Individual Retirement Account that earns 8% annually. Person A invests $ 3,000 a year from age 20 to 29, but then never saves another penny. Person B starts investing $ 3,000 a year at age 30 and saves that same amount annually for the rest of his life. Who has more money in the account at age 65?
    Person A
    Person B
    They both have the same
4. What's a good question to ask yourself whenever you pay a large expense?
    Should I go into debt to pay this bill?
    How can I charge this item to my expense account at work?
    Is this expense getting me closer to my top financial goals, and, if not, can it be deferred?
    Would Bill Gates have spent his money this way before he grew rich?
5. When two equally important goals conflict, which of the following questions may be the *least* helpful in resolving the conflict?
    Is someone's health involved?
    Which of the two goals benefits a larger number of people?
    Which goal, if not achieved, will harm more people?
    Which goal, if achieved, would be more impressive to readers of my obituary?
6. Once I've ranked my priorities, and am working towards them, is it a bad thing to change my mind?
    Probably, because you'll undermine your savings discipline and jeopardize your ability to achieve your chief goals.
    Not necessarily, but it does mean that most of what you've done to date will be in vain.
    No. In fact, your priorities are likely to change over time anyway, and you should be prepared for that.