PFL: Spending and Saving Flashcards
Decide uses for personal
funds
g
Predict possible spending
decisions in advance of a
family trip or other special
occasion.
- eat out or bring food in a cooler/non-perishables
- where to buy gas - get an app to find the cheapest
- where to stay: hotel, motel, car, etc.
- buying souvenirs or not
Show how to add money to
and withdraw money from a
personal account in a bank
or credit union.
deposit: ATM, counter, or transfer funds online
withdraw: all above, plus cash a cheque
Differentiate between
private and public
property.
public: owned by state/gov
private: owned by an individual/organization
Calculate the sales tax for
a given purchase.
Ontario: HST = 13%
Give an example of how
government uses tax
revenues.
(USA)
mandatory: Medicare, Social Security, veterans benefits, transportation, etc
discretionary: military, housing, education, etc
…the rest goes to pay off gov debts
Compare saving strategies,
including “Pay Yourself
First” and comparison
shopping.
pay yourself first: the first part of your paycheck should automatically go into savings
comparison shop
Compare the advantages
and disadvantages of
saving for financial goals.
adv: closer to fin goals
dis: less money for spending, less money for investing
Illustrate how inflation can
affect spending power over
time.
inflation reduces purchasing power over time by increasing the prices of many goods and services
Explain why saving is a
prerequisite to investing.
you cannot invest money that you need for basic necessities, because you need that money immediately, and cannot risk losing it. you can only invest discretionary income (the money left over after paying for necessities). note diff. from disposable income, which is money left after paying tax
Use a plan to manage
spending and achieve
financial goals.
how to create a spending plan:
- identify all sources of income
- list all expenses
- subtract expenses from income to see how much is left
- set priorities and make changes - allocate that surplus to savings (to accomplish a fin goal). if you were in the negative, cut back on your expenses, increase income, or both
Specify how monetary and
non-monetary assets can
contribute to net worth.
net worth = assets - liabilities
assets can include monetary assets (like money or bonds), and non-monetary assets (like a house, copyrights, patents, inventories, etc.)
Investigate account
management services
that financial institutions
provide.
- online banking
- talking to a fin advisor
- reorder cheques
- address change
- overdraft protection (covers occasional shortfall in money)
Differentiate between
an expense that is tax
deductible and one that
is not.
tax deductibles:
- charity
- home loan interest
Investigate the records
required to claim possible
tax credits.
- receipts
- income statement
- donation receipts
- children’s education
- benefits records
Justify reasons to keep
money in a bank or credit
union.
banking is safer, puts your money to good use (fractional reserve system), and you can earn interest (%)
Compare and contrast
different types of local
financial institutions and
the services they provide
credit union: a place you can pool your money with others so you can take out loans on low interest rates
check cashing services: you forefeit check to them, and they give money. can charge 3-5% per check
Summarize the advantages and disadvantages of checks, stored value cards, debit cards, gift cards and online and mobile payment systems
check
adv: secure, cannot be cashed at an unsecure location, only person who it is signed to can cash it
dis: wait for bank to open, there is a specific date when you can, you need a bank account
stored value
adv: used in credit card only scenarios, control cost/expenses
dis: high fees, like cash (you can lose it easily, can’t get back)
debit card
adv: convenient, takes less time to purchase, keeps you within budget, easier to get than credit card
dis: some banks charge extra fees, disputed charges more difficult to resolve, don’t improve credit score
gift card
adv: save time, convenient
dis: expire, some have fees (esp. ones from banks), company goes out of business = lose money, like cash
Summarize the risks and protections of checks, stored value cards, debit cards, gift cards and online and mobile payment systems.
credit card
protection: not carrying money
risk: theft or fraud
debit
protection: PIN
risk: theft, whole account at risk
Compare the costs of cashing a check with various third parties, such as a bank or credit union, check-cashing services and retail outlets.
check cashing services charge 3-5% for a check
canadian bank must cash checks for free
Reconcile a checking
account.
go through each payment on account statement and verify that it matches your own records
Demonstrate how to use
comparison shopping skills
to buy and finance a car.
use comparison shopping to buy a car: go to multiple dealerships, compare prices for the same models
Compare the advantages
and disadvantages of
owning a house versus
renting.
own
- tax benefits
- free to paint or remodel
- build equity (value of mortgaged item after deduction of charges against it)
- payment stays same
rent:
- no maintenance required
- easy to move
- houses are a depreciating asset
- payments can rise
Research the average costs of all expenses associated with a four-year college education, a wedding and a new versus used car.
4 year college education
- tuition: 10-30 thousand
- Clothing: $500-$1,000
- Food: $500-$1,000
- Gas/Car Insurance: $1,200-$3,000
- Books and school supplies: $400-$1,200
- Electronics: $200-$1,200
- Travel (amount dependent on how far away from home you go): $100-$1,000
wedding
- food, alcohol, venue: $18 000
- gown: $4000
- photography: $300-500
- ceremony: $1000
new car average
- $30 000
used car average
- $15 000
Research the average costs of all expenses associated with a four-year college education, a wedding and a new versus used car.
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