personal finance

Opportunity cost the best option you give up when you make a choice
types of risks you face when putting your money somewhere (3 main types) Inflation, Market /ValuePrice, Liquidity
Rule of 72 how long it will take for something to double 72/interest rate
Career More than a job, like requires training, long term commitment and likely includes benefits
tax deduction an amount subtracted from adjusted from income to arrive at taxable income
itemized deductions expenses a taxpayer is allowed to deduct from adjusted gross income
exemption a deduction from adjusted gross income for yourself, your spouse, and qualified dependents
form 1040EZ single or married filing a joint return, under 65 no dependents, do not itemize your deduction
credit is is an arrangement to receive cash, goods, or services now and pay for them later
Why is credit necessary for consumers to buy large items, for entrepreneurs to invest in their business
character your attitude toward your credit obligations
capacity your ability to meet your credit obligations
capital assets or net worth the value of them
collateral an asset that is pledge to insure the loan
savings Placing money somewhere that it will be safe but likely not grow
investment placing money somewhere in hopes that it grows over time, involves some risk but has chance at some reward
deficit amount spent over taken in in a given time period (year)
debt total amount owed
surplus money taken in as revenues over what is spent in a given time period
revenues money taken in
expenses money paid
withholdings money taken out of paycheck during the year so employee doesn’t get a large tax bill at the end of the year
risk vs reward Low risk is savings but offers no chance at rewardHigh risk is investing and has chance of earning returns
stocks partial ownership of a company; if the company’s value grows over time then so does the stockholders share in it
bonds loan to a company or government that the holder of the certificate is entitled to
Savings/Checking account typically earns little to no interest but is a safe place to keep money and convenient way to pay
CD Certificate of Deposit low risk low reward saving; it is for a set amount of time and pays more interest than a savings/checking account, but there’s a penalty if you withdraw funds early
social security number, credit card number, bank account information Information that people committing fraud are trying to get
Name 6 thngs on a credit report Name, SSN, credit score, current previous jobs/addresses, current open accounts, their maximum limit and current balance, any late payments (30, 60, 90 days late?), who has inquired into your report
Name some big tax deductions mortgage interest, student loan interest, college fees, 401k investments, charity
why is time the investors best friend compound interest: as you earn more interest, you earn interest not only on initial deposit but also on interest already earned….it adds up over time
What does a contract include rights and responsibilities of both parties
binding contract the binding means it is legally binding!
Ways that someone committing fraud may contact you TV commercial, internet pop up/site, phone, door to door, mail
Why it hurts to not pay debts/have bad credit cannot get home/auto loan or have to pay more, higher car insurance, cell phone bills, may have to pay utilities deposit, may hurt employment., may not be able to rent
credit card companies make most of their money off of __________________ People with bad credit
mortgage home loan, usually paid over 30 years
APR Interest rate that you’re paying
What is the difference between a credit card and a debit card? Credit card is a loan that you have to pay interest on, a debit card deducts payment right for your checking account
types of insurance homeowners, car, renters, life, boaters, specialty, health insurance….
benefits that an employer might offer dental health and vision insurance, vacation days (paid or unpaid?), 401k (contribution matching?), tuition/travel/resettle reinbursement,
deductable or co-pay amount you have to pay before insurance covers the rest
why buy insurance it spreads risk out amongst many people; protection for you in case you get sick, injured, or suffer loss of property
real estate investment that also provides a place to live, it can grow over time
liquidity ability to turn savings/investment into cash
inflation risk risk that your money’s value will decline over period of time as prices go up
market risk risk that your investment will lose value
diversification “Don’t put all your eggs in one basket” Investment strategy that says to put money in various sectors/investments so no one loss will greatly effect investments
3 Factors that affect how savings grows Time, amount invested, interest rate
How long will it take an investment earning 12% to double? 6 years (not bad!!!!)
Why should you not put money in a savings account long term? inflation risk: The value of money will go down more quickly then amount of money will grow
mutual fund collection of stocks selected by fund manager, meant to diversify and allow people to invest in stocks without having to research specific companies
budget statement/plan of how much one will make (revenue) and spend (expanses)
opportunity cost the best option you give up on whenever you make a decision
benefit the pleasure/good that you get out of a decision
cost what you give up when you make a decision
trade-offs giving up something to get something….every time you make a decision you are giving up on something
scarcity there is not enough to go around to satisfy our unlimited wants, this is why we have economics

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