Foundation In Personal Finance Chapter 1 Answers (2024)

FAQs

What was the first foundation in personal finance? ›

Foundation #1: Build an emergency fund, start with $500

The first foundation, saving a $500 emergency fund, is aimed at building financial stability.

Foundations has 13 flexible chapters with real world topics like saving, investing, college planning, global economics, and more!

What is Finance? Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting. There are three main types of finance: (1) personal, (2) corporate, and (3) public/government.

Ninety-three percent of millionaires said they got their wealth because they worked hard, not because they had big salaries. Only 31% averaged $100,000 a year over the course of their career, and one-third never made six figures in any single working year of their career.

A Millionaire's Best Friend

One awesome thing that you can take advantage of is compound interest. It may sound like an intimidating term, but it really isn't once you know what it means. Here's a little secret: compound interest is a millionaire's best friend. It's really free money.

#1 Don't Spend More Than You Make

When your bank balance is looking healthy after payday, it's easy to overspend and not be as careful. However, there are several issues at play that result in people relying on borrowing money, racking up debt and living way beyond their means.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

YOUR BUDGET

The 80/20 budget is a simpler version of it. Using the 80/20 budgeting method, 80% of your income goes toward monthly expenses and spending, while the other 20% goes toward savings and investments. Of course, the 80/20 budget rule won't work for everyone.

Dave Ramsey is transparent about his investment style, and he encourages his followers to avoid investing in individual stocks and purchase mutual funds with a long track record of good performance. Ramsey's net worth is estimated to be around $200 million as of 2021.

How many credits is foundations in personal finance? ›

Most schools will award a semester credit for our High School Personal Finance course. The estimated time of completion for this course is about 50 to 60 hours.

The second Foundation is Get Out of Debt. If you don't have any debt, that's great! You get to control where and how all of your money is saved or spent.

Biography. Eugene F. Fama, 2013 Nobel laureate in economic sciences, is widely recognized as the "father of modern finance." His research is well known in both the academic and investment communities.

Finance requires a wide range of knowledge and skills that seem difficult to master, especially for someone without any finance experience. Finance professionals have a high level of responsibility, to the teams of people that they direct, their supervisors, and upper management, which may be scary at first thought.

The First Foundation, a beginner emergency fund, is $500.

The second Foundation is Get Out of Debt. If you don't have any debt, that's great! You get to control where and how all of your money is saved or spent.

1. Spend less than you earn. This first principle is by far the most important. The only way you can be successful is by having more income than expenses every month.