Money
Currency of USA.
BONUS +100 if you list the currency of 2 other countries.
Dollar ($)
If my salary is $50,000 per year, how much will I get in every paycheck (every 2 weeks)? Use an online calculator.
Hint: there are 52 weeks in a year, so think about how many paychecks I get each year.
$1,923.08
List a NEED and a WANT.
Example
List a discretionary expense and a fixed expense.
Example
TRUE/FALSE: too much money won't let you live comfortably
False: You can never have too much money.
What money helps you save for.
(List at least 2)
Retirement, emergency funds, the future, large expenses.
If my wage is $10 per hour, and I work 8 hours a day for 5 days a week, how much will I get in every paycheck? (Usually paychecks come every 2 weeks)
$800
What is an EMERGENCY FUND and why is it needed? Give an example.
A sum of money you have set aside for any emergency that causes a large financial expense or any disruption in your income.
Why is budgeting helpful?
To ensure that you manage your money in an effective, responsible way.
People must budget their money to live within their means and save sufficiently for the future.
What are UTILITIES and are they a fixed or discretionary expense?
Water, electricity, etc.
Fixed expense
How to make money if you are not old enough for a job.
Offer services to people in your neighborhood/community.
My monthly income is $4,000. I spend $2,000 per month on rent, $300 per month on a car payment, $50 per month on insurance, and $100 per month on groceries. How much money do I have left for savings and discretionary expenses?
$1,550
Difference between a WAGE and a SALARY.
Wages are pay rates PER HOUR, salary is YEARLY pay.
What is "living within your means"?
Living a lifestyle that you CAN afford, not acting rich to impress others.
Do we need to EXACTLY follow our budget? Why or why not?
No, it's fine if we spend a little bit more or a little less than what's in our budget. Budgets should be thought of as a PLAN or GOAL, not a restriction.
Explain why I can't just withdraw money whenever I want from an IRA/401(k). Why do I have to wait until I am 59.5 years old?
OR
Explain why I have to start withdrawing money from my IRA/401(k) at age 73. Why can't I keep putting money in it?
BONUS + 400 if you explain both.
That is the requirement so that you can get the tax benefit/break.
Your employer can't just keep matching your contributions forever: there has to be a limit. You can't just keep growing and investing your money forever.
My salary is $90,000. I spent $4,000 on fixed expenses for the month and set aside $2,000 for savings for the month. Will I be able to buy a new motorcycle this month that I want that costs $2,000?
No
Explain professional vs. personal investing.
Professional - done by a company.
Personal - done by yourself.
Why do we set aside money for savings before buying discretionary expenses?
To ensure that we don't go overboard and are not tempted to spend all our money on only things that we want without saving any.
In what type of IRA are you taxed on your contributions? What type taxes you on the withdrawals?
Tax break now = Traditional
Tax break later = Roth
To get points for this question, you must also answer: Is a bond more or less risky than a stock? Why?
A loan that investor makes. They are paid back with guaranteed interest. Company/bank receiving the money uses it, and then pays investor principal and interest when bond matures.
Bond is less risky - you are guaranteed your money back because it is a loan you are making.
You can spend 2 hours partying at a club, which costs you $15 on food and drinks per hour. You can spend those 2 hours working by picking up an extra shift, which makes you $20 per hour. What is the opportunity cost of going out to party?
To get the full points for this question, you must also answer: Does negative opportunity cost mean you made the better or the worse decision?
$70
Better
How does money grow in an IRA? What makes it different than just a savings account? Why would I prefer to use an IRA over a savings account?
To get points for this question, you must also answer: What is the difference between an IRA and a 401(k) plan?
Grows through investment.
Tax breaks on earnings/income. Higher return with investment.
401(k) plan is set up by some companies, and involves employer 50% contribution match.
List the 3 steps to spend your income IN THE RIGHT ORDER.
1. Fixed expenses
2. Savings/investing
3. Discretionary expenses
At what age can you start taking money out of an IRA without tax penalties? At what age are you required to take money out of it?
59.5
73