Financial Literacy Final Flashcards
Opportunity Cost
Your next best option when your making a decision. (second choice)
Human resources- Provide examples-
the people working for a company/organization that are responsible for finishing out the job. Examples- firing, recruiting, onboarding, compensation. Smaller example would be truck driver or mail organizer.
capital resources- Provide examples-
man made elements employed to produce goods or services. Examples- equipment, machinery, tools.
Natural resources- Provide examples-
materials or substances that occur in nature that can be used for economic gain. Examples-water, minerals, trees, fertile land, and forests.
Scarcity-
the state of being short in supply; shortage.
Wealth-
an abundance of valuable possessions or money
Banking Fee’s-
charges levied by financial institutions for various services and transactions. Such as foreign transaction fees, ATM fees, and monthly maintenance fees.
Advantages of an entrepreneur
rewarding career, work-life autonomy, leadership experience, work from any location, and company control.
Characteristics of an entrepreneur
creativity, perseverance, adaptability, passion, decision-making, and optimism.
Disadvantages of being an entrepreneur (working for oneself)
long hours and work-life imbalance, stress, uncertainty, lack of support systems, lack of accountability, early days of financial instability.
Human capital
skills, knowledge, and experience an individual or population has, viewed in terms of their value or cost an organization.
Gross pay-
total amount of money an employee earns before any deductions are made.
Net pay-
amount of pay remaining for an employee after deductions have been taken from the individual’s gross pay. What u need to know when figuring out your monthly budget.
Paycheck- mandatory deductions (who pays)-
a check for salary or wages made out to an employee. Who pays- employers, examples include federal and state taxes, social security, and contributions.
FICA- Know what FICA stand for-
called for all working people in the US to fund social security so that it could provide them with financial benefits later in life. Stands for Federal Insurance Contributions Act.
Itemized deductions-
certain expenses allowed by the IRS that can decrease your taxable income.
Standard Deductions-
specific dollar amounts that reduce the amount of income which you’re taxed.
Income-
money received, especially on a regular basis, for work or through investments
Median Pay-
figure that represents the middle point of all salaries within a specific career or category.
Financial Institution-
financial institution is a company engaged in the business of dealing with financial and economic transactions such as deposits, loans, investments, and currency
Examples of financial institutions around us
check cashing store, payday loan store and Bank & Credit
Insurance-
main purpose is to ensure transfer risk. Insurance companies have to have a large pool of people paying premiums so that the premium payments of all the insured clients will cover the costs for the emergencies of the few who need it.
Why people buy insurance
o To protect their savings from unexpected events
o To cover medical expenses and routine care
o To protect property and shield against legal liability
o To have peace of mind and a feeling of safety
Premium
an amount to be paid for an insurance policy
Writing a check- What should be included-
date, recipients name, dollar amount, signature, and memo(optional)
Check register-
report that records and tracks the transactions and balance of a checking account
Bank statement
is a document issued by a bank once a month to its customers, listing the transactions impacting a bank account
Deposit slips
small paper form that a bank customer includes when depositing funds into a bank account.
FDIC
Federal Deposit Insurance Corporation, is an independent government agency that oversees the banking industry. The FDIC primary duty is to ensure deposits at US member banks in case they fail.
Credit Card
small plastic card issued by a bank, business, etc., allowing the holder to purchase goods or services on credit. Which means you are spending money that you will have to pay back including credit rate.
ATM-
is an automated teller machine that allows you to deposit and withdraw cash anytime, without needing to visit a bank during business hours.
Wire Transfer
an electronic transfer of funds via a network that is directed by banks and transfer service agencies around the world. They have information like the recipient’s name and account number.
Interest-
money paid regularly at a particular rate for the use of money lent or for delaying the repayment of a debt. . It is the price a borrower pays to lender for the use of credit provided by the lender.
Types of Credit-
revolving credit, installment loans, and open credit.
Credit Report-
A credit report is a physical record of a persons credit history. This report is based off a person’s ability to pay off their loans on time from the past. If you have a bad credit report, some lenders may not want to lend you money.
Credit Score-
A credit score is a three-digit number that represents your credit risk when looking at someone’s overall loan ability. If this number is low, it means that the loaner is bad at paying loans on time and if this number is high that means that the loaner is very reliable and good at paying their loans on time.
Principal-
amount of money lent or invested, on which interest is paid.
APR- what is it, what it stands for-
Annual percentage is the yearly rate charged for a loan or earned by an investment and includes interest and fees.
Human capital-
refers to the economic value of a workers experience and skills such as training intelligence and skills in an employee.
Postsecondary opportunities-
any further education you persue post your high school graduation
Scholarships- costs/benefits-
money for college that is usually based on merit such as athletic or academic performance. The benefits are that it does not have to be paid back and it is offered by many institutions. The costs are that applications can take considerable time and are not guaranteed
Credit card- Benefits-
it enhances financial health, improve credit score, and easy loan approval
Credit Card -Fees-
paid back on a specific date. The disadvantages of current cards are that sometimes young people borrow more money than they should for college loans
Investment-
the action or process of investing money for profit or material use.
Scams-
crime involving finance
stocks
an investment or share in a company
Bonds-
is a fixed income instrument and investment product where individuals lend money to a government or company at a certain interest rate for an amount of time. The entity repays the individuals with interest in addition to the original face value of the bond
Diversification-
reduces risk by holding basket of securities that behave differently in different market conditions. It is an investing strategy used to manage risk. It involves spreading investments across a range of different companies and industries and asset classes.
Benefits of saving-
the benefit of saving your income today is that you will have more money in the future to have bigger items and satisfactions in the future.
Income
money received especially on a regular basis for work or other investments
Saving-
putting money aside for the future for bigger purchases or emergencies.
Entrepreneur-
someone who starts a business who is creative, good with relationships, organized, confident, and hard working.
credit
the ability of a customer to obtain goods and services before payment, based on the trust that the payment will be paid in the future. is the price a borrower pays to lenders for their use of credit provided by the lender. Borrows and lenders benefit in credit transaction. Commercial bank, credit unions and savings and loan or institutions that provide credit.
Risk-
- is defined in financial terms as the chance that an outcome or investment actual gates will differ from an expected outcome or return risk includes the possibility of some or all of an original investment.
Finance Charge-
a fee charged for the use of credit or the extension of existing credit.
Stock prices-
only tells you a company’s current value or its market value period so comma the price represents how much the stock trades at or the price agreed upon the buyer and seller.
Incentive-
encourages a person to do, achieve, or buy something
Principal-
amount of money lent or invested, on which interest is paid.
Risk and Return
risk refers to the uncertainty or variability of investments and outcomes. It represents the chance of losing money or not achieving expected returns. Return is the gain or loss from an investment over a period of time period the risk return tradeoff suggests that higher risk investments have the potential for higher returns.
