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Personal Finance > Test 1 > Flashcards

Test 1 Flashcards

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1
Q

Income

A

-1st
-green

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2
Q

Gifts

A

-2nd
-yellow

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3
Q

taxes

A

-3rd
-red

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4
Q

Needs

A

-4th

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5
Q

Wants

A

-5th

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6
Q

Savings

A

-6th

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7
Q

Cash Flow

A

7th

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8
Q

Monthly Budget order

A

-Income
-Gifts
-taxes
-needs
-wants
-savings
-cash flow

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9
Q

What are we classified as (Basics)

A

-savers
-spenders
-all called to be stewards

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10
Q

What is our personal budget similar to (Basics)

A

-income statement
-tracks money going in and out

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11
Q

Assets (Basics)

A

-things we own

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12
Q

Liabilities (Basics)

A

-things we owe

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13
Q

Difference between assets and liabilities (Basics)

A

-Net worth

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14
Q

Many personal aspects to many financial topics? (Basics)

A

-range of healthy decisions to be made depending on the preference of the individual

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15
Q

Making a budget? (Basics)

A

-merely putting a plan together

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16
Q

Financial Freedom? (Basics)

A

-tracking actual income/spending
-comparing it to your budget
-revising your budget as needed

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17
Q

Fear? (basics)

A

-fear of diving deep into their personal finances
-scared to find unhealthy habits
-don’t want to face and change problems

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18
Q

Income source? (income)

A

-not limited to one source
-have as many as you can manage

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19
Q

what is a huge factor when it comes to income? (income)

A

-cost of living
-different places have higher/lower cost of living

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20
Q

what do savers do? (income)

A

-reduce expenses
-increase cash flow

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21
Q

What do spenders do? (income)

A

-increase income
-increase cash flow

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22
Q

what is gross income? (income)

A

-amount you make before taxes and other reductions

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23
Q

Timing of income? (income)

A

some jobs pay
-daily
-weekly
-bi-weekly
-monthly

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24
Q

Paid in arrears? (income)

A

-take longer to get first paycheck
-after you leave the company you will receive more than just last weeks pay

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25
Q

many companies require associates? (income)

A

-key time into a system
-job codes and assigning hours for each day the work

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26
Q

Immediate/deferred income (income)

A

-some is immediately recognized
-some isn’t recognized until a later date (retire)

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27
Q

Salary plus bonus? (income)

A

-many companies offer
-most the time salary is the more important factor
-many other benefits based on salary

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28
Q

More school? (income)

A

-more education/degrees leads to higher income in many industries

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29
Q

expenses be separated into? (expenses)

A

-wants
-needs

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30
Q

wants (expenses)

A

-really only be purchased with excess cash that hasn’t been taxed, given, saved, or spent on needs

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31
Q

Forecast cost? (expenses)

A

-we can forecast cost
-infinite number of circumstance that can change cost
-almost all changes increase price

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32
Q

When are most expenses paid? (expenses)

A

-paid after tax

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33
Q

How do you save on expenses? (expenses)

A

-Credit cards and reward points
-redeem instead of paying cash

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34
Q

Inflation effect on salary? (expenses)

A

-almost always increases expenses more than your salary is increased

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35
Q

fees that need to be factored in? (expenses)

A

-many different hidden cost

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36
Q

What should be factored into the price of something? (expenses)

A

-The cost to maintain it (pet)

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37
Q

Dave Ramseys envelope system (expenses)

A

-establishes discipline for monthly spending
-fill envelope with a certain amount of cash for a certain expense for that month

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38
Q

Credit card? (expenses)

A

-put as many expenses as you can on it to rack up points
-essentially reduces price
-only do it if financially disciplined

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39
Q

are peoples spending and making connected? (expenses)

A

-not always connected
-many peoples expenses outweigh their income (debt)

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40
Q

Higher income (taxes)

A

-higher the income the more taxes you’ll pay
-exceptions like working in military/war zone

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41
Q

Tax brackets? (taxes)

A

-many different ones that calculate how much federal income tax you owe
-based on income ranging from 10%-37%

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42
Q

Taxes deducted from from most employees? (taxes)

A

-federal income tax
-FICA (social security + medicare)
-state income tax (41 states)

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43
Q

When to file taxes? (taxes)

A

-required to file taxes by April 15 of each year
-moved to next work day if date falls on weekend/holiday

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44
Q

File your taxes easy? (taxes)

A

-document your income and expenses throughout the year (organized)

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45
Q

What to do if you get audited by the IRS? (taxes)

A

-get help from an accountant

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46
Q

what should be considered when making any purchase/investment? (taxes)

A

-tax consequences should be considered

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47
Q

“pay cash” (assets)

A

-not just paper money anymore
-means you can afford it regardless of payment method

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48
Q

Largest assets people own? (assets)

A

-house
-vehicle

49
Q

assets value can? (assets)

A

Appreciate- value goes up
depreciate- value goes down

50
Q

what can you do with most assets? (assets)

A

-sold
-traded
-given
-seized

51
Q

Positive net worth (assets)

A

-assets are higher than your liabilities

52
Q

How can you improve your financial situation? (assets)

A

-if an asset has accompanying liability that is greater than the value getting rid of it can improve your financial situation

53
Q

Good idea in retirement? (assets)

A

-have a diverse portfolio of assets

54
Q

What does high enough assets do to spending? (assets)

A

-makes spending almost insignificant

55
Q

What does high income and reasonable expenses do to assets? (assets)

A

-grow the assets

56
Q

Value of asset after useful life? (assets)

A

-still have some sort of value

57
Q

all amounts you owe? (liabilities)

A

-keep detailed records
-plan to fully payback as soon as you can

58
Q

Good strategy for multiple debts? (liabilities)

A

-pay off highest interest rate first
-pay whichever one you can completely pay off first

59
Q

Before buying something? (liabilities)

A

-think of the liability that might accompany the asset

60
Q

while you owe the bank for house/car? (liabilities)

A

-bank is technically the owner of the asset
-held as collateral for your loan

61
Q

Financial Freedom? (liabilities)

A

-having zero liabilities

62
Q

Insurance companies (insurance)

A

-betting that your premiums will be greater than the claims they’ll pay
-calculate scoring your risk through underwriting process

63
Q

types of insurance (insurance)

A

-health, dental, vision, home owners, automobile, boat, life, and many more

64
Q

Insurance policies? (insurance)

A

-built in deductible (your share of the bill)
-company pays the rest

65
Q

Insurance policy adjusting? (insurance)

A

-frequently adjusted up/down based on the risk of the one being insured

66
Q

Savers (insurance)

A

-find it harder to substantiate certain types of insurance
-extended warranties

67
Q

Insurance coverage? (insurance)

A

-benefit of most employers
-you can seek additional insurance

68
Q

utilize credit (credit)

A

-The earlier the better
-open a credit card as soon as possible

69
Q

Credit history (credit)

A

-Don’t cancel first card
-keep credit history long
-upgrade first card to a better one

70
Q

Most important factor in calculating your credit score? (credit)

A

-on time payments
-missing can drastically hurt it

71
Q

Credit utilization credit score (credit)

A

-very important in calculating credit score
-keep utilization as low as you can (under 30%)

72
Q

New lines of credit (credit)

A

-opening new lines can lower credit score
-paying down credit/increasing lines will increase credit score

73
Q

Is credit needed? (credit)

A

-not a necessity if you have cash
-only used to borrow money

74
Q

Credit cards (credit)

A

-not all cards are equal
-better ones require a higher credit score and have annual fees

75
Q

Credit score (credit)

A

-the higher your credit score the better interest rates your eligible for

76
Q

retirement time? (retirement)

A

-not in control
-can happen before, after, or not at all

77
Q

Expenses (retirement)

A

-should be much lower
-expenses paid off
-not putting money away for retirement

78
Q

when do most people retire and why? (retirement)

A

-most people wait until 65 so they are covered by medicare

79
Q

is a million enough to retire? (retirement)

A

-not enough to retire comfortably
-inflation makes it less and less
-expenses grow more and more

80
Q

when do you make the most money in your life? (retirement)

A

-right before you retire
-money entices people to keep working a bit longer

81
Q

Roth IRA (IRA)

A

-put after tax dollars
-grow tax free as long as you take it out after 59 1/2

82
Q

Great aspect of Roth IRA (IRA)

A

-all contributions can be withdrawn tax and penalty free

83
Q

Contribution amount (IRA)

A

-contribute up to 7,000 per year if your under 50
-contribute up to 8000 if 50 or older

84
Q

Qualifications for Roth IRA (IRA)

A

-make less than 153,000 per year

85
Q

Traditional IRA (IRA)

A

-open using after tax dollars
-earnings will be taxed based on the length of your investment

86
Q

young adults (housing)

A

-for many buying a house won’t be an option for a while
-save up for down payment
-wait for lower interest rates

87
Q

apartment vs home (housing)

A

-renting an apartment can sometimes be more beneficial
-homes don’t always appreciate
-liability of owning a home can be significant

88
Q

House payment components (housing)

A

-principal
-interest
-escrow

89
Q

escrow (housing)

A

-contains property taxes and homeowners insurance payments
-easier to break up in more management payments

90
Q

Interest rate on home (housing)

A

-almost as important of a factor as the purchase price

91
Q

when should you buy a house? (house)

A

-planning on living at the same location for 5-7 years
-have a plan to rent it out

92
Q

what percent selling fee do realtors charge? (house)

A

-6%

93
Q

Mortgages (housing)

A

-most are 30 year fixed rates

94
Q

hidden cost to owning a home? (housing)

A

-termite bonds, pest control, pine straw, supplies, paint…

95
Q

what happens after living in a house for 5 years? (housing)

A

-when you sell it, up to 250,000 in profit can be received tax free if your single
-doubled if married

96
Q

buying a car (vehicles)

A

-negotiating the price can save you thousands

97
Q

car insurance (vehicles)

A

-before buying a car you should consider the price of car insurance

98
Q

car depreciation (vehicle)

A

-most depreciate significantly after first few years
-driving a car for a long time helps level out the cost of ownership

99
Q

maintenance of car (vehicles)

A

-when buying a car considered what type of gas it takes
-tires it needs
-oil changes

100
Q

car loans (vehicles)

A

-most car loans offered between 3-8 years
-interest rates are often more favorable than mortgage rates

101
Q

electric cars (vehicles)

A

-true cost is more than gas cars
-gas is cheap enough where there isn’t a point in switching

102
Q

trade in value (vehicles)

A

-your car likely has a significant trade in value even if its beat up with high mileage

103
Q

leasing a car (vehicles)

A

-if you enjoy a new car it makes more financial sense

104
Q

No car? (vehicles)

A

-sometimes makes more since not to own a car
-city with good public transportation/ride sharing

105
Q

401K company match (401k)

A

-always contribute the percentage you need in order to get the company to match

106
Q

increase 401k (401k)

A

-great way to increase 401K savings is to increase % in tandem with getting a raise

107
Q

benefits of contributing to 401k (401k)

A

-deferring paying taxes on that income until you withdraw it
-take out a loan and pay yourself interest

108
Q

contribution amount (401k)

A

-an individual can contribute up to 23,000 each year
-this number can go up each year
-amount is in addition to the company match

109
Q

not-for-profit (401k)

A

-offers a 403b
-effectively the same thing

110
Q

pension

A

-nearly extinct company benefits
-great way to get people to stay with the same company until retirement

111
Q

how a pension works? (pension)

A

-retiree will get a pre determined amount of money upon retirement
-taken annuity payments or lump sum
-get an amount dependent how well the invested dollars have performed

112
Q

Accounting (pension)

A

-extremely costly/difficult
-why many companies stopped offering it

113
Q

Three primary places to give (giving)

A

-church
-charity
-people

114
Q

giving to a church or charity? (giving)

A

-can trigger a tax benefit if you itemize

115
Q

what’s the amount you receive per giver? (giving)

A

-18,000 per giver completely tax free each ear

116
Q

first step to reach financial independence (goals)

A

-setting financial goals

117
Q

what’s important? (goals)

A

-important to track goals to ensure you decisions are helping meet them

118
Q

type of goals? (goals)

A

-good to have quantifiable goals rather then generic ones

Personal Finance (1 decks)

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