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Personal Finance > Financial Records > Flashcards

Financial Records Flashcards

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1
Q

What to keep and where

financial plans/budgeting
* in home files
* fireproof home sale

A
  • financial plans
  • balance sheets and cash flow statements
  • current budget
  • list of safe deposit box contents
  • names and contact information for financial advisers
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2
Q

what to keep and where

career and employment
* in home files

A
  • current resume
  • college transcripts
  • letters of recommendation
  • employee benefits descriptions
  • written career plans
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3
Q

what to keep and where

banking and financial services
* in home files

A
  • checkbook, unused checks, and canceled checks
  • list of locations and account numbers for all bank accounts
  • checking and savings account statements
  • locations and access numbers for safe deposit boxes
  • account transaction receipts
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4
Q

what to keep and where

taxes
* in home files

A
  • copies of all income tax returns, both state and federal, for the past three years, including all supporting document
  • receipts for all donations of cash property
  • log of volunteer expenses
  • receipts for property taxes paid
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5
Q

what to keep and where

credit
* in home files

A
  • utility and telephone bills
  • monthly credit card statements
  • receipts of credit payments
  • list of credit accounts and telephone numbers to report lost or stolen cards
  • unused credit cards
  • credit reports and scores
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6
Q

what to keep and where

financial plans/budgeting
* safe deposit box

A
  • names and contact information for financial advisers
  • copy of written financial plans, goals, and budgets
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7
Q

what to keep and where

career and employment
* safe deposit box

A
  • employer retirement plan correspondence
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8
Q

what to keep and where

banking and financial services
* safe deposit box

A
  • list of financial institutions and account numbers for all financial services accounts
  • certificates of deposit
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9
Q

what to keep and where

taxes
* safe deposit box

A
  • copies of all income tax filings, both state and federal, for the past three years
  • records of securities purchased and sold
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10
Q

what to keep and where

credit
* safe deposit box

A
  • list of credit accounts and telephone numbers to report lost or stolen cards
  • loan discarge notice when it is paid off
  • credit card bills for seven years if they support tax deductions
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11
Q

Define

opportunity cost

A

the value of the next best alternative that must be foregone

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12
Q

Define

trade-off

A
  • is giving up one thing for another
  • it is wise to give up some current spending in order to enjoy a financially comfortable future
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13
Q

Define

utility

A

is the ability of a good or service to satisfy a human want

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14
Q

Define

marginal utility

A

is the extra satisfaction derived from having one more incremental unit of a product or service

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15
Q

Define

Marginal cost

A

is the additional cost of one more incremental unit of some item

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16
Q

Concept

is the extra satisfaction derived from having one more incremental unit of a product or service

A

marginal utility

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17
Q

Concept

is the additional cost of one more increment unit of some item

A

marginal cost

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18
Q

what does marginal cost say about the comparison

  • the first car has a sticker price of $29,100; some options
  • second has a price of $32,800; with numerous options
A

are the additional costs—$3,700 ($32,800-$29,100), worth the additional options on the second car

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19
Q

Define

marginal tax rate

A
  • the rate at which your last dollar earned (not all your income) is taxed.
  • it is the highest tax bracket that your taxable income puts you in
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20
Q

What is her effective marginal tax rate

Isatou, has a taxable income of $66,000 at 25%
receives a $1,000 bonus from her employer,
she has to pay state income taxes of 6 percent,
local income taxes of 2 percent and Social Security and Medicare taxes of 7.65

A

(25% + 6% + 2% + 7.65%) = 40.65%

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21
Q

Define

tax-exempt income

A
  • generally is from an investment whose earnings are free, or exempt, from taxation
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22
Q

Example

tax-exempt income

A

municipal bonds issued by agencies of state and local governments

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23
Q

Which after tax investment is better

  • Serena has an marginal tax rate of 25%
  • she receives 5% on her taxable investment of $5,000
  • a state bond is also yielding 4%
A

investment ($5,000 x 5%) x 25% = $250 - $62.50 = $187.50
bond ($5,000 x 4%) = $200 - $0 = $200

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24
Q

Describe

tax-deferred income

A

occurs when the payment of tax on the earnings from the investment can be postponed for a period of time

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25
Q

Concept

is the task of maximizing interest earnings and minimizing fees on all of your funds kept readily available for day-to-day living expenses, etc.

A

monetary asset management

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26
Q

Define

monetary asset management

A

is the task of maxmimizing interest earnings and minimizing fees on all of your funds kept readily available for day-to-day living expenses, etc

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27
Q

Define

liquidity

A

refers to the speed and ease with which an asset can be converted to cash

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28
Q

Define

safe investments

A

funds that are free from financial risk

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29
Q

name the monetary asset management services

depository institutions
* banks
* mutual savings banks
* credit unions

A
  • checking
  • savings
  • lending
  • credit cards
  • investments
  • trust advice
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30
Q

name the financial provider

  • checking
  • savings
  • lending
  • trust advice
A

depository institutions

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31
Q

Name the financial provider

  • credit cards
A
  • depository institutions
  • financial services companies
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32
Q

name the monetary asset management services

mutual funds

A
  • money market funds
  • tax-exempt funds
  • bond funds
  • stock funds
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33
Q

name the monetary asset management services

stock brokerage firms

A
  • securities investments
  • mutual funds
  • real estate investment trusts
34
Q

name the monetary asset management services

financial services companies

A
  • checking
  • savings
  • lending
  • credit cards
  • securities investments
  • REITs
  • accounting and legal advice
35
Q

name the monetary asset management services

insurance companies

A
  • property and liability
  • health and life insurance
  • credit services
  • financial planning services
36
Q

name the financial provider

  • checking
  • savings
  • lending
  • credit cards
  • REITs
  • accounting and legal advice
A

financial service companies

37
Q

Define

depository institutions

A
  • financial institutions in the US that are legally allowed to offer checking and savings accounts to individuals and business as well as provide loans.
  • can offer some form of government account insurance on deposited funds
38
Q

Define

commercial banks

A
  • type of bank that accepts deposits in checking and savings accounts and provides transactional services such as accepting deposits
  • under federal and state regulations
39
Q

Concept

type of bank that accepts deposits in checking and savings accounts and provides transactional services such as accepting deposits

A

commercial banks

40
Q

Define

community banks

A
  • type of commercial bank that focuses ono providing traditional banking services in their local communities, where they obtain most of their core deposits locally
  • relationship bankers
41
Q

Define

mutual savings banks

A
  • type of thrift institution that also accept deposits
  • make housing and consumer loans
  • orignally designed to serve low-income individuals
  • they are called “mutual” becuase the depositors own the institution and share in the earnings
42
Q

Concept

  • type of thrift institution that also accept deposits
  • make housing and consumer loans
  • orignally designed to serve low-income individuals
A

mutual savings banks

43
Q

Define

savings institutions

A
  • also called thrift institutions
  • accept deposits
  • provide mortgage and personal loans to individuals
44
Q

Concept

  • also called thrift institutions
  • accept deposits
  • provide mortgage and personal loans to individuals
A

savings institutions

45
Q

Define

savings and loan association

A
  • focus primarily on accepting savings and providing mortgage and consumer loans
  • they offer checking services through interest-earning NOW accounts
  • generally pay 10 to 20 bps higher than commercial banks
46
Q

Concept

  • focus primarily on accepting savings and providing mortgage and consumer loans
  • they offer checking services through interest-earning NOW accounts
  • generally pay 10 to 20 bps higher than commercial banks
A

savings and loan association

47
Q

Describe

FDIC

A
  • deposits in depository institutions are insured against loss of both the amount on deposit and the accrued interest by various insurance funds
48
Q

mechanics of

FDIC insurance

A
  1. the maximum insurance on all of. your single-ownership (individual) accounts (held in your name only) is $250,000
  2. The maximum insurance on all of your joint accounts (accounts held with other invdividuals) is $250,000
  3. The maximum insurance on all of your retirement accounts is $250,000
  4. A maximum of $250,000 in insurance per beneficiary is available on payable on death accounts
49
Q

Concept

  1. the maximum insurance on all of. your single-ownership (individual) accounts (held in your name only) is $250,000
  2. The maximum insurance on all of your joint accounts (accounts held with other invdividuals) is $250,000
  3. The maximum insurance on all of your retirement accounts is $250,000
  4. A maximum of $250,000 in insurance per beneficiary is available on payable on death accounts
A

FDIC insurance

50
Q

Describe

NCUSIF

A
  • Federally chartered credit unions have their accounts insured through the National Credit Union Share Insurance Fund, which is administered by the NCUA
  • insures some state-chartered credit unions if they choose to participate
51
Q

Concept

The FDIC equivalent insurance for federally chartered credit unions

A

NCUSIF
* National Credit Union Share Insurance Fund

52
Q

Concept

The insurance fund for federally chartered credit unions is administered by this organization

A

NCUA
* National Credit Union Administration

53
Q

Concept

insurance for most state-chartered credit unions

A

private insurance programs
* some participate in NCUSIF

54
Q

Define

mutual funds

A

investment companies that raise money by selling shares to the public and then invest that money in a diversified portfolio of investments

55
Q

Concept

investment companies that raise money by selling shares to the public and then invest that money in a diversified portfolio of investments

A

mutual funds

56
Q

Concept

is a deposit account held at a financial institution that performs transactions that allow for withdrawals and deposits by the account depositor

A

checking account

57
Q

alternate names for

checking account

A

transaction account

58
Q

nature of liquidity

checking account

A

very liquid

59
Q

concept

checks may be written against amounts on deposit

A

checking account

60
Q

List fees associated with

checking accounts

A
  • using ATMs
  • account maintenance
  • low balance
  • bounced checks
  • stop-payment orders
  • overdrafts
  • lost debit cards
  • paper statement
  • foreign transactions
61
Q

Concept

checking accounts that typically pay no interest

A

demand-deposit accounts

62
Q

Concept

any account upon which you can write check that pays interest

A

interest-earning checking account
* negotiable oder of withdrawal [NOW] account

63
Q

Define

NOW account

A

an interest-bearing account is any account upon which you can write check pays interest
* negotiable order of withdrawal [NOW] account

64
Q

Concept

the combination of a base interest rate and a higher rate

A

tiered interest

65
Q

Define

tiered interest

A

the combination of a base interest rate and a higher rate
Example:
* an account pays 0.30% on the first $1,000
* 0.40% above $1,000

66
Q

three ways to avoid overdraft fees

A
  1. automatic funds transfer agreement
  2. automatic overdraft loan agreement
  3. opt-in overdraft/bounce protection
67
Q

three types of check endorsement

A
  1. blank endorsement—contains only the payee’s signature on back; becomes a bearer instrument
  2. restrictive endorsement—uses the phrase for deposit only
  3. special endorsement—limits who can cash a check
68
Q

People tend to bank where?

A
  • with the familiar and comfortable
  • therefore, they tend to bank where their parents bank
69
Q

how often should you reconcile you bank account

A

monthly

70
Q

reasons why

interest rates change

A
  1. monetary policy changes
  2. Federal government borrowing
  3. businesses borrowing
  4. loan rates rise or fall
70
Q

List

Types of cards used to access your money

A
  • ATM cards
  • debit cards
  • prepaid cards
  • gift cards
  • credit cards
  • key fobs
  • EBT cards
71
Q

Liability limits

lost or stolen debit cards

A

a customer may be liable for unauthroized withdrawals if:
* loss is limited to $50 if institution is notified within two business days
* loss is limited to $500 if institution is notified within 3 to 59 days
* a customer risks unlimited loss on traders made after the 60 day period

72
Q

steps

EFT error resolution process

A
  • write or call the financial institution immediately
  • must be no later than 60 days from the date of erroneous statement
  • explain the error, the type, dollar amount and date
  • may be required to send additional details in writing within 10 business day
73
Q

protections under

Electronic Funds Transfer Act

A

the financial institution must
* promptly investigate the error and resolve it within 45 days
* errors involving new accounts (opened last 30 days), POS transactions, and foreign transactions may take up to 90 days
* if the resolution takes more than 10 business days, they must recedit the amount in question
* notify the customer of the results of the investigation

74
Q

greater protections are offered for fraudulent use of which type of card transaction under the Electronic Funds Transfer Act
* debit cards
* credit cards

A

protections offered for fraudulent use of debit cards are not as strong as when you use your credit card

75
Q

reason

people often inadvertently spend many dollars a month automatically paying certain bills—some legitimate and some not

A

auomatic billing or auto-renewal billing

76
Q

list techniques for

protecting your privacy

A
  • a false $1 charge to a debit or credit card is a sign of a potential larger theft as it means the perpetrator is checking to see if an account number is valid and that you won’t notice
  • avoid banking via a public network
  • be cautious with private information on job search sites and social networking
  • always log-off
  • regularly change your passwords
  • use a shredder
77
Q

critics of Bitcoin argue

A
  • it is volatile
  • inflexible
  • minimally used in legitimate commerce
78
Q

Concept

verification of the equality of bank account debit and credits

A

bank reconciliations

79
Q

Concept

  • calculation of the amount of debt for an individual
  • create a plan to pay off debts
A

credit management

80
Q

Concept

application of basic financial principles in structured personal financial situations to meet a limited need

A

personal finance

81
Q

Concept

application of responsible and emotionally sound money management strategies and principles in one’s own personal finances

A

financial literacy

Personal Finance (10 decks)

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