International Baccalaureate (IB) Practice Exam

You should save money for three basic reasons: emergency fund, purchases and wealth building.

1. True

2. False

The correct answer is: True

Saving money for emergency funds, purchases, and wealth building is a sound financial strategy that is widely recognized in personal finance. An emergency fund provides a financial safety net for unexpected expenses such as medical emergencies, car repairs, or job loss, ensuring that one does not fall into debt. Saving for purchases allows individuals to plan for significant expenses, such as a home, education, or a vacation, without relying on credit or loans, promoting more responsible financial habits. Lastly, wealth building through savings and investments enables individuals to grow their financial assets over time, setting the stage for long-term financial independence and security. Recognizing these three fundamental purposes underscores the importance of a well-rounded savings strategy, which can help individuals achieve both immediate and future financial goals.