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this withholding tax percentage is deducted depending on the amount of gross pay earned

Social Security

this is the nation's retirement program


the amount of money subtracted from the gross pay earned for mandatory systematic taxes, employee sponsored medical benefits, and or retirement benefits


the is the nation's health care policy for elderly and disabled

Net Pay

the amount of money left after all deductions have been withheld from the gross pay earned in the pay period


a person who relies on the tax payer for financial support


this type of card electronically carries the balance of the employee's net pay

Gross Pay

the total amount of money earned during a pay period before deductions


this withholding tax is the largest deduction withheld from an employee's gross income


this includes Fed OSADI/EE or Social Security and Fed MED/EE or Medicare


they collect federal taxes, issue regulations, and reinforce tax laws written by the United States Congress


these are used to determine the amount of federal taxes withheld from a paycheck based on certain characteristics


this is the amount taken from the employee's paycheck for medical benefits

Paycheck Stub

a document included each pay period which outlines paycheck deductions

Paper Paycheck

the most common method payment for employees


this is also known as the Electronic Fund Transfer

Pay Period

the length of time for which an employee's wages are calculated; most are weekly, bi-weekly, twice a month, or monthly


these are compulsory charges imposed on citizens by local, state, and federal government

Direct Deposit

paycheck money goes straight into designated account


government keeping money from your paycheck to pay your taxes


form filled out before you start a job that tells the government how much money to take out for taxes


employment verification form used to verify the eligibility of individuals and to avoid hiring undocumented workers

Depository Institutions

businesses which offer multiple services in banking and finance

Commercial Bank

largest full service institutions operated under state and federal laws

Credit Union

non-profit cooperative institution owned by their members

Share Drafts

credit union checking account

Share Certificate

credit union savings account

Interest Rate

the percentage used annually to calculate the total interest either gained or lost from an account supplied by a depository institution


federal deposit insurance corporation is a federal government agency which insures federally chartered commercial banks and savings and loan associated ($250,000)


national credit union administration provides protection for credit union ($250,000)

Depository Institution Services Offered

checking and savings accounts, loans, investments, and financial counseling

Online Banking

internet banking; allows consumers to complete transactions with wireless technology; access account information and statements; transfer funds; manage bills and apply for credit

URL Security

ends or begins in "s" (shttp or https); closed lock to the right of URL or in the bottom right hand corner of the web

Online Bill Payment

allows consumers to send money from one account to a vender

Never Send Through Email

social security number, bank account number, or pin numbers

Recurring Payment

bills are sent to be paid on the due date or a previous date

Regulation E

covers all electronic fund transfers including transfers occuring through an electronic terminal, computer, telephone, or magnetic tape

Privacy Policy

outlines how a consumer's information will be used and protected

Opting Out

of a financial policy allows a consumer to request a depository institution to share only a limited amount of personal information


what people do to meet short-term goals; financially secure usually safe and money earns interest


setting money aside for long-term goals; involves risk of loss with buying and selling; purchasing assets with the goal of increasing future income

Delayed Gratification

giving up something now to get something better later

Opportunity Cost

what we give up to get something else

Two Difficult Reasons to Save Money

immediate gratification where we want it and we want it now; lack of education not knowing how

Some Savings Tools

savings bond, checking and savings accounts, certificate of deposit, and money market deposit account

Checking Account

allows each purchase using money put into account; most liquid tool; less need for cash

Savings Account

holds money not being spent; account holds money for emergencies

Money Market Deposit Account

government insured account; usual minimum deposit of $1,000; account with high interest rate of return

Certificate of Deposit

insured interest restricted access (CD); interest rate changes depending on time length of seven days to eight years; early withdrawls equals PENTALTY

Savings Bond

cost 50% of the face value from the US government; tax exempt for college expenses; purchase for $25-$10,000

Compound Interest

the idea of earning interest on interest;
A=P(1+i)to the N power {A is the amount in the account, P in the principle, i is the interest rate expressed as a decimal, N is the number of years compounded}

Rate of Return

total return on an investment expressed as a percentage of the amount of money invested

Rate of Return Formula

total return (capital gain or loss) divided by amount of money invested (principle) equal rate of return (expressed as percent and can be negative)

Investment Risk

uncertainty about whether you will make or lose money

Inflation Risk

risk that inflation will lower the value of your money

Rule of 72

allows a person to easily calculate when the future value of an investment will double the principal amount; rule is only an approximation

Rule of 72 Formula

72 divided by interest rate (not in decimal) equals number of years needed to double the principal investment

How to Beat Inflation

find higher interest rate then the inflation rate

3-6 Months

how much living expenses you should have saved before you begin to invest

Financial Risk Pyramid

risk and potential return increases from: security (base), wealth accumulation (middle), to speculative (top)

Lower Risk Tolerance

the idea of losing money bothers you more, need to try to take more risks to build long-term wealth

Higher Risk Tolerance

be careful not to put all of your money in high risk investments that put your wealth at risk, need to be intentional about putting some money in lower-risk savings


an investment tool that involves a share of ownership in a company; if the company makes a profit, dividend are paid to shareholders; market price of the stock is based on supply and demand; historic annual gains are over 10%


an investment tool that is not truly invest, more like saving but are not FDIC insured; leading a company money; has a set interest rate

Mutual Funds

an investment tool that combines many types of stock into one package (like a gift basket); fees can be high, but requires low maintenance; historic annual gains are 8-10%

Index Funds

an investment tool that involves a mutual fund with lower fees because it is easier to manage; the fund includes stocks of companies that are within a certain category (technology, oil, fashion, etc.); examples is the Wilshire 5000 which includes the largest 5000 companies in the United States

Real Estate

residential or commercial property; risky and time-consuming; very illiquid

Speculative Investments

collectibles; high risk - requires a willing buyer of often obscure products

Portfolio Diversification

don't put all of your eggs in one basket; let the good balance out the bad

Investment Philosophy

each person has a tolerance level for the amount of risk they are willing to take on; what is your tolerance risk? - low, moderate, or high


when goods, services, or money is received in exchange for a promise to pay a definite sume of money at a future date

Credit Card

pre-approved credit which can be used for the purchase of goods and services now and payment of them later

Closed-End Credit

one-time loan; purpose specified in application; specific number of equal payments; amount agreed upon during application process (mortgages, automobile, education loans)

Open-End Credit

credit extended in advance; may be used for a variety of purposes; payment vary; amount may be increased for responsible consumers (credit cards)


annual percentage rate at which interest is charged on a credit card account each month

Credit Report

a record of consumer's credit history that includes information about credit cards use as well as the use of other types of credit, such as auto loans, student loans, and mortgage loans

Credit Score

mathematical tool created to help a lender evaluate the risk associated with lending a consumer money; based upon information in the credit report; numeric grade - high number is good

Credit Card Safety Tips

sign the back with a signature and "Please See I.D."; do not leave cards lying around; never give out account number unless making purchases; a lost or stolen credit card should always be reported immediately

Credit Reporting Agencies

equifax, transunion, and experian keep a record of consumer's credit transactions

4 Categories for a Credit Report

personal information (name and alliases, SSN, etc.), account summary (date account was opened, payment history, etc.), public record items related to credit (legal suits, bankruptcy, forclosures, etc.), and credit inquiries (request for credit reports, soft and hard checks, looking for credit, etc.)

Identity Theft

is when personal information is stolen and used to commit fraud with your credit

Stolen Identity

need to place a fraud alert on your credit report; close accounts; file a police report; and contact the FTC

Prevent Identity Theft

avoid carry SSN on anything in your wallet; shred financial documents; never give out personal information on the phone or internet unless you know who you are dealing with

Payday Loan

short-term loan providing immediate cash; can be in the risky form of an internet lender where a person will be required to give the lending company access to financial accounts as well as a SSN

Risk Management

how you deal with the chance of a potential personal or financial loss


means of guaranteeing your financial protection against various risks


amount you pay each month in insurance; simply the amount you pay for an insurance policy

Coverage Limit

maximum amount the insurance company will pay if you file a claim


amount of a loss you must pay out of your own pocket before the insurance company will step in and pay the rest

General Liability

required by law; covers damage you cause to other people's property and bodily injuries you cause to people outside your car

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