Personal Finance Chapter 8 and 9

Question 1

disposable income

Answer 1

money you have left after all taxes have been paid off always put 10% into savings

Question 2

Benefits of FInancial Planning

Answer 2

1. ) Determine and evaluate options for your money
2. ) Prioritize so money goes further
3. )Avoid careless and wasteful spending
4. ) Organize financial resources
5. )AVoid worries by planning your saving, spending and borrowing

Question 3

budget

Answer 3

a spending and savings plan based on your expected income and expenses

Question 4

Income

Answer 4

any sort of money that you receive

ex.) salary, bonus, tips, etc.

Question 5

expenses

Answer 5

anything you have to pay money for

ex.) bills, lunch, coffee, gas, food, clothes, rent

Question 6

fixed expenses

Answer 6

cannot change without making a major lifestyle change;obligated to pay regardless of other events
ex.) rent, utilities, bills, car payment

Question 7

variable expenses

Answer 7

depend on the events and choices you make; subject to change

ex.)coffee, clothes, food, gas, misc

Question 8

net worth

Answer 8

used by insurance banks, a list of items of values a person owns minus the amount that they owe formula: assets-liabilities= net worth

Question 9

assets

Answer 9

a list of value that a person owns

ex.) property, car, cash, home, jewelry

Question 10

liabilities

Answer 10

amounts of money owed to others

ex.) mortgages, any debt, car payment

Question 11

types of personal records

Answer 11

1. )Records of Income and Expenses
2. ) Statement of net worth
3. ) Personal Property Inventory
4. )Tax records

Question 12

personal property inventory

Answer 12

used by insurance in the case of an accident. a list of all valuable items you own as well as purchase prices and approximate current values

Question 13

Tax records

Answer 13

W2 statements, receipts, keep at least 6 years

Question 14

Electronic Filing System

Answer 14

advantages: takes up less space, easily stored
disadvantages: someone else could have access to your files, could be lost with a flash drive etc.

Question 15

Manual Filing System

Answer 15

advantages: only you have access to them, have original copies
disadvantages: can be lost in the case of an accident, takes up a lot of space

Question 16

checking account

Answer 16

an account that allows depositors to write checks to make payments, also called a demand deposit, it’s very liquid

Question 17

Advantages of a checking account

Answer 17

1. )liquid
2. ) Access to other banking services
3. ) safer than using cash
4. ) built in record keeping system

Question 18

canceled check

Answer 18

checks the bank has processed or cleared

Question 19

overdraft

Answer 19

writing a check without sufficient funds in your account. receive a fee

Question 20

floating a check

Answer 20

when a check is written with NSF in the hope that there will be time to deposit money before the check is cancelled

Question 21

outstanding

Answer 21

checks that have been written but not checked or cashed

Question 22

stop payment order

Answer 22

a request to the bank to not cash or process a specific check (usually a mistake)

Question 23

blank endorsement

Answer 23

signature of the payee written exactly as his/her name appears on the front f the check

Question 24

special endorsement

Answer 24

written when the payee signs over a check to a third person

Question 25

restrictive endorsement

Answer 25

restricts or limits the use of a checkbook

Question 26

payee

Answer 26

person who receives the money

Question 27

drawer

Answer 27

the person that is paying

Question 28

Joint Checking account

Answer 28

opened by 2 or more people anyone on the account has the right to the entire account deposit

Question 29

Special checking account

Answer 29

for customers who write a small numbers of checks each moth charged low flat service fee for each check written

Question 30

standard checking account

Answer 30

set monthly fee will avoid monthly fee if you are able to maintain a minimum balance

Question 31

Interest-Bearing

Answer 31

pays interest if you keep a minimum balance, higher minimum balance

Question 32

FDIC

Answer 32

government regulation on banks, insures deposit of customers against loss up to 250,000

Question 33

Banking Services

Answer 33

guaranteed payment check
money order
debit card
ATMS
credit cards

Question 34

Certified check

Answer 34

stamped check by bank to prove this money is sufficient

Question 35

cashier check

Answer 35

money is transferred from your account to the bank and the bank writes a check to the payee

Question 36

Truth-in-Saving Act

Answer 36

any checking account advertised as “free” must carry no hidden charges or conditions

Question 37

Bank Fees examples

Answer 37

over draft fees, stop payment fees