Financial Literacy Final Exam Study Guide
Terms in this set (56)
Things that are essential to your health and security
Recording everything you spend money on and how much you spend each day
Costs which occur on an irregular basis, rather than monthly Ex insurance school taxes
Spending/Saving plan (Budget)
Exact details an how you're going to use your money to pay for the things you want and need
Pay Yourself First (PYF)
Adding an expense to your spending plan to cover the amount you'll set aside as savings
desires that can be satisfied by consuming a good, service or leisure activity
an expense that will be the same total amount regardless of changes in the amount of sales, production, or some other activity
The amount of money you receive
The monetary, material or assessed worth of an asset, good or service
increase or decrease depending on a company's production volume; they rise as production increases and fall as production decreases.
alternative cost, is the value (not a benefit) of the choice of a best alternative cost while making a decision
A paper or electronic document used to record both planned and actual income and expenditures over a period of time
a borrower receives something of value now and agrees to repay the lender at some date in the future, generally with interest.
the termination or due date on which an installment loan must be paid in full
Truth in Leading Act
United States federal law designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.
is a detailed report of an individual's credit history. Credit bureaus collect information and create credit reports based on that information, and lenders use the reports along with other details to determine loan applicants' credit worthiness.
the annual rate charged for borrowing or earned through an investment, and is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan.
is a monetary loan that is repaid in regular payments over a set period of time
types of crime in which someone wrongfully obtains and uses another person's personal data in some way that involves fraud or deception, typically for economic gain
a number assigned to a person that indicates to lenders their capacity to repay a loan
an initial payment made when something is bought on credit.
the fraudulent acquisition and use of a person's private identifying information, usually for financial gain.
the state of owing money
the position of a student or trainee who works in an organization, sometimes without pay, in order to gain work experience or satisfy requirements for a qualification
debt to income ratio
is one way lenders, including mortgage lenders, measure an individual's ability to manage monthly payment and repay debts.
fail to fulfill an obligation, especially to repay a loan or to appear in a court of law.
is a U.S. law that creates a payroll tax requiring a deduction from the paychecks of employees as well as a contribution from employers. The withheld amounts go towards the funding of the Social Security program and Medicare.
is the form that an employer must send to an employee and the Internal Revenue Service (IRS) at the end of the year.
3 forms of payment
The most common alternative payment methods are debit cards, charge cards, prepaid cards, direct debit, bank transfers, phone and mobile payments, checks, money orders and cash payments.
cost of living
is the amount of money needed to sustain a certain level of living, including basic expenses such as housing, food, taxes and health care.
federal income tax
is a tax levied by the United States Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, trusts, and other legal entities.
is the term used to describe all of the money you've made while working at your job, figured before any deductions are taken for state and federal taxes, Social Security and health insurance
is a payment made to employees based on the value of sales achieved.
charges etc are difficult to notice, for example because they are not included in the basic price of something. [
Employee's Withholding Allowance Certificate") is an Internal Revenue Service (IRS) tax form completed by an employee in the United States to indicate his or her tax situation (exemptions, status, etc.) to the employer.
A time during which a borrower does not have to pay interest or repay the principal on a loan is common with student loans, and may be granted while the student is still in school or just after graduation when the student has few resources to repay the loan.
is the amount one receives after taxes and deductions have been withheld during a pay period.
when and to the extent that they actually work more than 40 hours in a work week.
risk to return relationship
Higher risk is associated with greater probability of higher return and lower risk with a greater probability of smaller return.
how does the value of money change over time
because of inflation and deflation. Inflation decreases the value of existing money in the economy.
an investment program funded by shareholders that trades in diversified holdings and is professionally managed.
importance of time diversification when investing
the purpose of investing is to provide capital to fund future expenditures, then time horizon should be an important consideration. In other words, for investors with a long investment horizon, inflation risk may be of greater concern than capital risk, while for shorter-term investors, the opposite may apply.
the availability of liquid assets to a market or company.
liquid assets; cash.
a high volume of activity in a market.
is a type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
a variety of securities so that the weight of any security is small. spread out the risk
methods of saving/investing
Start saving, form a savings habit, and pay yourself first!
Open and keep an account at a bank or credit union that meets your needs.
Track your savings and investments, and monitor what you own.
Plan for short-term and long-term goals.
Build up emergency savings for unexpected events.
savings account characteristics
Interest Rates. The way in which your savings will grow is with a competitive interest rate. ...
Bonus Incentives. ...
Promotional Interest Rate. ...
Minimum Opening Deposit. ...
Monthly Deposit Requirements. ...
Frequency of Withdrawals. ...
ATM Facility. ...
interest pros and cons
The advantages of having an interest only mortgage loan are: Monthly payments are low during the term. The borrower can purchase a larger home later by qualifying for a larger loan amount.
checking account characteristics
Convenience - Of course, branch locations are a major factor, but also look for checking accounts that offer features like internet banking, or ATM use at little or no cost. Internet banking gives you the freedom to pay bills, transfer funds, and monitor your account at home.
financial services offered by despository institutions
aka banks which includes commercial banks, savings and loans, and credit unions, receive money from depositors to lend out to borrowers. ...
The net worth of a bank is equal to its bank capital which is equal to total assets minus its total liabilities.
examples of deductions and withholdings
Federal income tax,
State taxes, and.
Local (city, county) income tax withholding in some areas. (Other local taxes can include school district taxes, community college taxes, state disability or unemployment insurance, for example.)
saving vs investing
You can earn interest by putting money in a savings account, but savings accounts generally earn a lower return than investments. Investments have the potential for higher return than a regular savings account. ... Note: Remember: the greater the risk of an investment, the higher potential return or loss of your money.
a document detailing the terms and conditions of a contract of insurance.
coverage is available to protect you against vehicle damages not caused by a collision. For example, it may protect you against vehicle damages caused Theft, vandalism, natural disasters, falling objects, fire, hail, flood, animal damage.
protects an individual or business from the risk that they may be sued and held legally liable for something such as malpractice, injury or negligence. ... Intentional damage and contractual liabilities are typically not covered in these types of policies.