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personal finance final exam review
Terms in this set (50)
money received, especially on a regular basis, for work or through investments.
A fixed amount of money paid to an employee for each pay period.
the total amount of an employee's earnings before deductions are taken out
Amount of income left after taxes and deductions have been taken out.
A tax for which the percentage of income paid in taxes increases as income increases
A tax for which the percentage of income paid in taxes decreases as income increases
A tax in which the average tax rate is the same at all income levels.
total assets minus total liabilities
Annual Percentage Rate (APR)
interest rate for a whole year
interest earned on both the principal amount and any interest already earned
interest paid on the principal alone
the price paid for the use of borrowed money
liability insurance (auto)
Covers injury to other people or damage to their property
Tax paid to the state, federal, and local governments based on income earned over the past year.
a tax based on real estate and other property
A tax on a sale of merchandise or services
Consumer tax on a specific kind of merchandise, such as tobacco.
capital gains tax
a tax levied on the returns that people earn from capital investments, like the profits from the sale of stocks or a home
Supplemental Nutrition Assistance Program: Nutritional Assistance
a special supplemental food program for women, infants, and children, sponsored by the USDA
Childrens Health Insurance Program - health insurance for children under 18 whose parents earn too much to qualify for Medicaid, but not enough to afford private insurance.
A federal and state assistance program that pays for health care services for people who cannot afford them.
Amount you pay monthly, quarterly, semiannually or annually to purchase different types of insurance
Amount you must pay before you begin receiving any benefits from your insurance company
digging through trash to find personal info for identity theft
stealing information from a credit card by swiping it through a processing machine that gathers the information
An attack that sends an email or displays a Web announcement that falsely claims to be from a legitimate enterprise in an attempt to trick the user into surrendering private information
invading someone else's computer, usually for personal gain or just for the satisfaction of invading someone else's computer
What does FICA stand for ?
Federal Insurance Contributions Act: taken to pay for older Americans
When would you fill out a W-4 form ?
Each year and when you have financial or personal situation change and before job
What is the relationship between education level and income level?
higher the education level the more you will be paid
how can you avoid overdraft fees ?
set up alerts
keep everything up to date
What are the advantages or disadvantages of using credit or debit card instead of cash?
you are more likely to over spend
if your wallet is lost you loss all your money
can't gain good interest on your money
can't gain a good credit score
not ever place takes cards
gives money a sense of value
what is the difference between a bank and a credit union ?
bank : profit, higher fees & lower interest credit union : non-profit, lower fees & higher interest
what is the best method for paying a credit card bill?
pay the most and on time
how do banks earn a profit
when would you want compound interest
when this is the interest being added to your money instead of taken out
when would you want simple interest
on any type of loan
What does FAFSA stand for? Why is it important ?
Free Application for Federal Student Aid, help someone in low income family go to college
what factors affect your credit score?
paying your bills can affect it good or bad depending on if you pay it on time.
what makes up the largest part of your credit score?
payment history : %35 Amounts owed : %30 length of credit history : %15
what is the difference between real and nominal interest? why is it so important to know when making investment?
real: adjusted for inflation
nominal is what you make not adjusted for inflation
because of inflation your money may not have the same value so you have to buy less or add even more money
what is typically riskiest form of investment?
What does IRA stand for?
Individual Retirement Account
what is the difference between a traditional and a Roth IRA?
traditional: grows over time and can be taken out at any time , put it in nor taxed but it's taxed when you take it out
Roth IRA: is taxed when you put money in so when you take it out you don't pay tax
How does "don't put all your eggs in one basket" apply in investments?
if you put all this money into one investment and that investment goes down you lose all that money to were if you had diversity if one fails you still have the other ones
what is the difference between disability insurance and health insurance?
health pays for your medical bills while disability replaces your income.
what is COBRA and when would you need it?
The Consolidated Omnibus Budget Reconciliation Act, insurance for when you have been laid off
what is the relationship between risk and return in investing?
higher risk higher return
What amendment created the federal income tax?
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