1. What's the most important first step to take towards achieving your financial goals?
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Contribute regularly to an IRA or 401(k).
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Work hard so you'll get promoted to a better job.
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Figure out which goals are achievable and worth striving for.
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Put yourself on a tight budget to get spending under control.
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2. Financial planners generally stress the importance of starting to save and invest early. What's the main reason why?
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Because it helps build good habits that will last a lifetime.
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Because of the power of compounding and appreciation.
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Because you generally don't have as many bills to pay when you are young as when you are older.
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Because it means you'll need the services of a financial planner for longer in your life.
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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?
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Person A
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Person B
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They both have the same
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4. What's a good question to ask yourself whenever you pay a large expense?
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Should I go into debt to pay this bill?
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How can I charge this item to my expense account at work?
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Is this expense getting me closer to my top financial goals, and, if not, can it be deferred?
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Would Bill Gates have spent his money this way before he grew rich?
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5. When two equally important goals conflict, which of the following questions may be the *least* helpful in resolving the conflict?
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Is someone's health involved?
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Which of the two goals benefits a larger number of people?
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Which goal, if not achieved, will harm more people?
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Which goal, if achieved, would be more impressive to readers of my obituary?
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6. Once I've ranked my priorities, and am working towards them, is it a bad thing to change my mind?
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Probably, because you'll undermine your savings discipline and jeopardize your ability to achieve your chief goals.
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Not necessarily, but it does mean that most of what you've done to date will be in vain.
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No. In fact, your priorities are likely to change over time anyway, and you should be prepared for that.
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