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ECON!! > personal finance > Flashcards

personal finance Flashcards

1
Q

gross income

A
  • total amount earned during a pay period
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2
Q

net income

A

total amount AFTER withholdings (fees)

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3
Q

types of deductions

A
  • FICA: social security
  • Medicare
  • Taxes: state and federal
  • Retirement: employer matching or 401K
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4
Q

Federal income tax

A

the less you make the lower your % (progressive income tax)

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5
Q

withholdings do not include…

A

property tax
sales tax
gift tax
estate tax

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6
Q

cost of living

A

the amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare in a certain place and time period

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7
Q

collateral

A

the assets which are pledged as security for a loan

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8
Q

commercial banks

A

a financial institution that accepts deposits, offers checking account services, makes various loans and offers basic financial products like CD’s and savings accounts to individuals and small banks

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9
Q

banks

A

banks have more adv. for mobile apps and tech and provides more branches

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10
Q

credit unions

A

are non-profit institutions owned by members collectively offer less options in commercial banking

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11
Q

checking account

A

an acct held by a bank or credit union that allows the acct. holder to deposit or withdraw cash

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12
Q

savings account

A

a deposit account held at a bank or other financial instituion that provides principle security and a modest interest rate

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13
Q

liquidity

A

the efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price

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14
Q

non- bank financial institutions

A
  • finance companies
  • investment banks
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15
Q

commercial

A
  • provides services to large corps.
  • more competitive and higher paying salary as a career but often work long hours
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16
Q

investment banks

A

-works w many different clients in the gen. public
- offers a better work life balance but not as high of a salary

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17
Q

money market accts

A
  • higher interest rates than traditional savings acct.
  • flexible withdrawls
  • minimum acct balance
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18
Q

certificate of deposit

A

a type of savings account offered by banks and credit unions. You generally agree to keep your money in the CD without taking a withdrawal for a specified length of time

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19
Q

bonds

A

Bonds are issued by governments and corporations when they want to raise money. By buying a bond, you’re giving the issuer a loan, and they agree to pay you back the face value of the loan on a specific date, and to pay you periodic interest payments along the way, usually twice a year.

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20
Q

stocks

A

a share in the ownership of a company, including a claim on the company’s earnings and assets

21
Q

bonds are…

A
  • more stable om the short term
  • tend to underperform over the long term and earn money through interest
22
Q

stocks are…

A
  • more volitile in the short term
  • better performers over the long term, earn money through dividends
23
Q

mutual funds

A

a managed fund that pools money from shareholders to invest in securities

24
Q

simple interest

A

interest earned on the principal investment

25
Q

compound interest

A

earning interest on interest

26
Q

principal

A

is the original amount of money invested or saved

27
Q

three c’s of creditworthiness

A

capacity
character
capital

28
Q

credit monitoring

A

whoever is giving you the loan, checks on you to make sure you can pay your bills

29
Q

credit rating agencies

A

experian, equifax, transunion

30
Q

credit score

A

a # from 300 to 850 that represents a consumers creditworthiness

31
Q

5 factors that affect your credit score…

A
  • payment history
  • credit utlilization
  • credit use
  • credit mix,
  • credit inquires
32
Q

credit report

A
  • detailed record on financial history
  • lists every item in credit history that affects credit score
  • assembled into 4 categories: identifying information, credit accts, credit inquiryies and public records
  • derived from credit report, single numerical grade of credit worthiness
33
Q

types of loans

A
  • mortgage
  • student loans
  • title loans
  • payday loans
34
Q

mortgage

A

a loan used to purchase or maintain a home, land, or other types of real estate, secured by the property itself

35
Q

types of mortgages

A
  • conventional - tradition housing loan
  • govt.
  • fixed rate- results in a predictable, monthly payment
  • adjustable rate - subject to market condition, this can work well you dont plan to live in your home for a long time
36
Q

title and payday loans

A

typically lowers interest rates (300%) holds vehicles title as collateral, can borrow higher amt. typically 30-day terms, can reposses for non payment

37
Q

credit cards

A

-allows cardholders to borrow funds to pay for goods and services w/ merchants that accept cards for paymemt
- can build credit

38
Q

debit cards

A

money deducted from your bank acct, helps avoid debt, little to no fees, no interest charges, wont help build credit

39
Q

investing

A

deploying capital/towards projects or activities that are expected to generate a positve financial return over time

40
Q

investing strategies

A

define, find a stategy, set up an investing workflow

41
Q

401K

A

a defined contribution, tax- advantaged retirement savings plan that is sponsered by ones employer

42
Q

IRA - individual retirement acct.

A
  • a tax- advantaged retirement savings account to which you contribute either pre- or after tax money and which grows on either a tax defined or tax free basis
43
Q

types of insurance

A

life, health/medical, home, car

44
Q

types of LIFE insurance

A

term, final expense, whole, universal, variable

45
Q

types of HEALTH insurance

A

fee for service, HMO, PPO, Medicare, Medicaid

46
Q

homeowners vs renters insurance

A
  1. covers the actual building you live in, more expensive
  2. landlord pays for the coverage on the actual building, you pay for coverage on personal items
47
Q

types of car insurance

A

liabilty , collision, comprehensive

48
Q

financial goal setting-

A
  • short term- build up an emergency fund and start a small business
  • intermediate - pay off all your credit card debt and start investing 20% of your home
  • long term- earn enough from your side hustle to cover all expenses
49
Q

rate of return

A

the net gain or loss of an investment over a specified time period, expressed as a percentage of the investments initial cost

ECON!! (7 decks)

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