Personal Finance Essay

978 Words4 Pages
1. Describe a real or made up but realistic situation that could cause you or someone you know to have to use money from a financial reserve. (3-6 sentences. 2.0 points) A made up situation that could cause myself or someone I know to have to use money from a financial reserve could be if you go to buy a house. You could pull the money out and use it towards the house. 2. How many months' worth of expenses do you think your financial reserve should include? Describe at least two reasons for this decision. (3-6 sentences. 2.0 points) I believe that at least three months worth of my expenses should go towards my financial reserve. That is a good way to start out your financial reserve. You can get it growing quickly. 3. Would you rather have a savings account that offered simple interest, or an account that offered compound interest? Why? (3-6 sentences. 2.0 points) An account that offered compound interest. You will get my interest over the years. 4. If you were opening a savings account with compound interest, would you prefer an account that offers annual compounding, quarterly compounding, or daily compounding? Why? (3-6 sentences. 2.0 points) I would prefer an account that offers quarterly compounding. You can gain more money that way. 5. Which strategy for saving do you think would work best for you? Why? (3-6 sentences. 2.0 points) A savings account would work best for me. I would not feel obligated to spend it because it will not be in my direct posession. 6. Describe two financial goals that you would want to meet before you begin investing. Explain why you would want to reach those goals first. (2-4 sentences. 2.0 points) I will need to pay and get my drivers license, and invest in a car. I have priorities to take care of first before investing. 7. Describe at least two factors of an investment that you would want to consider before
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