financial Lit Semester Review Flashcards
someone who is famous in an app and posts something and people follow them
social media influencer
getting other people to do something, (jump on the wagon)
Bandwagon
the more of an item you acquire, the less useful or enjoyable it becomes
Diminishing marginal utility
How does situational context and values influence your decisions?
In a situation like the desert, the water was more important than the diamonds, you first figure out the situation you are in and then think of your values at the time
Where does the money come from when you use your debit card?
It comes from your checking account
Jocelyn gets a text alert from the bank that her account balance has dropped below $100 after a series of $20 ATM withdrawals. She has not used her ATM in over a week and wonders what she should do. What would you recommend?
Contact your bank immediately as it appears that your account may have been hacked
List ways to access the money in your checking account.
debit card, going to the bank, ATM
What is FDIC insurance?
If you have under 250,000 your money can be reimbursed, Protects bank depositors against the loss of their insured deposits
What is the largest source of fees for banks when it comes to checking accounts?
overdraft fees
What is a person to person payment app? In what situations might it be used?
A person to person payment is when you only pay to one other person and not a bank or corporation. Mia’s friends send her the money they owe for the pizza she bought.
Direct deposit typically refers to your employer sending your bills electronically to your bank account. T or F
true
Eliminating late fees is an advantage of paying your bills using online bill pay feature with your checking account. T or F
true
Checking cashing stores typically cost less than using a checking account at a traditional bank. T or F
false
Your friend says it’s a bad idea to have a checking account because of all the fees. Make a persuasive argument about the benefits of having a checking account.
Your money is protected in the bank, the fees are a low amount, don’t overspend and the fees stay low
- What is the difference between saving and investing?
Saving→ Its long term, money not used often, usually saved every month
Investing→ short term, money goes to making more money
Experts recommend that you accumulate enough to cover 3 to 6 ________ of expenses in your emergency fund.
Months
Fill in the blanks with the correct responses. If you follow the 50-20-30 rule of budgeting, you’ll be putting 50% of your monthly income toward _________, 20% of your monthly income toward _________, and 30% of your monthly income toward ________.
Needs, Savings, Wants
You are developing a savings plan and using short-, medium-, and long-term goals to motivate you. What is an example of each type of goal?
Short→ computer → 2 months
Medium→ college → 2 months to 3 years
Long→ house → 3 years +
when should you start saving for retirement?
in your 20’s
What is inflation and how does it impact savings?
Infalstions is the rate of increase in prices
Prices can increase because there is more demand compared to the supply
You are starting your first job and you are asked to complete some paperwork on your first day. Which form will determine how much money is withheld from your paycheck for federal and state income taxes?
W-4
Which of the following paycheck withholdings puts money into a retirement investment fund that you will manage?
401(k) contribution
What form am I? I am received when you start a job. You use me to prove that you are eligible to work in the U.S., and you must provide forms of identification when submitting me.
I-9
When you complete your 1040 form, if you overpaid your taxes and the government owes you money, that is called a __________.
refund
What tax form am I? I am received in January. There is one of me for every employer that you worked for in the previous year. I have information on how much you earned and how much you paid in taxes for the previous calendar year.
W-2
What tax form am I? I am the official form that U.S. taxpayers use to file their annual income tax return in the spring.
1040
What is the deadline to file your tax return? List day and month.
April 15
Which of the following transactions will REDUCE your checking account balance immediately?
Using your debit card to pay for groceries at the supermarket
Which of the following is an effective strategy for saving?
Save a certain percentage of each paycheck and deposit it directly into a savings account
What are some examples of wants and needs?
Want→ Tv, books, ipad
Need→ food, water, shelter
Which of these costs would be the MOST difficult to adjust if you were looking to reduce your expenses?
loan payment on a new car
What does it mean to pay yourself first?
As soon as you get your paycheck put some of it into savings
what is a budget?
it creates financial stability
What is the difference between net and gross pay?
Gross pay is before taxes and reduction, net pay is after
what is renter’s insurance?
Protects personal property in a retired apartment, Etc from unexpected circumstances
You’re considering moving into a 3 bedroom apartment with 2 roommates, rather than living on your own post-college. Mark which of YOUR expenses would likely decrease by having roommates.
Rent, groceries, utilities, maybe chores
Aaron realizes he has a budget deficit (over spend the money, in the whole) of roughly $175 at the end of two months in a row. What can he do to fix the problem?
Look at his past expanses and see what is not necessary. Then get rid of the unnecessaries until it works for your budget.
What does its cost of living mean?
The level of prices related to everyday items
Grace has an annual salary of $50,000 while Jorge has an annual salary of $30,000. However, Jorge is actually the “wealthier” person. Explain how this can be the case.
Grace might have more reduction, or large taxes that take away a large amount of her money
What is the difference between a credit card and a debit card?
Debt→ takes money directly out of checking account
Credit→ it borrowed money that you pay back at the end of the month
I am a type of credit card that requires cardholders to make a security deposit equal to the credit limit on their account. Due to this deposit requirement, I am often a good choice for young people looking to establish a credit history.
secured credit card
The shorter your term length, the _______ your monthly payments, and the _______ the total interest you will pay.
higher, lower
what are the advantages of using a credit card?
You can use money that you don’t have and pay it back at a later date
As a young adult, all of the following are good strategies for building credit, EXCEPT:
Open a checking account, and start using a debit card
what is an outstanding balance on a credit card?
The amount you still owe after you gave made your most recent payment
amount of money for the loan
Principal
items of value they cash in
Collateral
extra money paid for borrowing money
interest
length of loan
Term
interest stays the same throughout the loan
fixed
interest can change throughout the loan
Variable interest rate
an open line of credit that can be used for any purchases as long as you;re under limit
Revolving credit
What are the two most important factors in calculating your credit score?
Payment history, amount that you owe/ credit utilization
What types of information can be found on a credit report?
Payment history, types of credit accounts, credit limits
what is the website you can go to request a free credit report?
annual credit report.com
what are ways to improve your credit score?
Pay off any debt, keep paying the total amount every month
Melvin is 19 years old and wants to begin establishing a credit history. What can he do?
Co sign a credit card with his parents, when using it pay off all the loan at the end of the month
Which of the following individuals or groups would be the LEAST likely to look at your credit score?
employers
You have a credit card and want to know the best way to use it to boost your credit score. What can you do?
Pay off all the debt and then stop using it
who tracks all of your credit information?
companies named Equifax, Experian and transunion
Which of the following could have a NEGATIVE impact on your credit score?
Applying for multiple credit cards in a short period of time (e.g., a week)
How can your credit score impact your financial situation?
Helps lenders determine your dependability, if you are likely to pay a loan back
Explain the relationship between your credit report and your credit score.
Your credit score is calculated to determine your credit report
Why is it important to review your credit report annually?
Make sure all the information is correct
What is the best advice to prevent identity theft?
Keep your personal information secure
What are three ways to protect yourself from identity theft when using your smartphone or computer?
Do not click on any links, Do not give out your personal information, use anti-virus software and update regularly
