Define It!
4Cs of Credit
What is Character, Capacity, Capital, Co-Sign
Saving vs Investing
Saving: Earn interest, Safe, Loses purchasing power (inflation)
Investing: Saving to earn income long-term (through interest, dividends, etc), Higher rate of return, No guarantees on returns (risky)
4 Factors that influence buying
What is income, status, trends, habits, advertising, impulse buying.
Joyce makes $2,200 of gross income per month working as a student with the Government of Canada. Answer the questions below based on the information provided. Each month, Joyce pays 13% in income tax deductions, 5.95% in CPP deductions, and 1.58% in EI deductions. What is Joyce's net income?
What is $1746.34
TFSA meaning
What is Tax Free Savings Account. Can invest within, earnings are tax free, no tax return but limited contribution.
Checkings Account vs Savings Account
What is Checkings Account: Convenient way to manage your money for your daily needs. Comes with a debit card that allows you to easily access your chequing account balance. Access to cheques.
What is Savings Account Account: Accrue (accumulate) interest on your savings. Good way to save up for big purchases - limited amount of withdrawals = less tempted to spend from your savings.You can withdraw funds quickly for emergencies.
Schedule II Banks
What is Citibank, American Express, HSBC
Government Deductions
CPP: To help Canadians prepare for their retirement, the Canadian government requires that every employee contribute to the Canada Pension Plan.
EI: An insurance premium paid each pay period to protect your income in the event of a job loss you are not responsible for.
Income Tax: Income tax percentage increases the more you earn. The more you earn, the more you'll pay.
Calculate the Disposable Income:
Gross income: $63,000/year
Rent: $3000/month
EI: 1.58%
CPP: 5.95%
Income Tax: 15%
Clothing: $200/month
Car Payments: $190/month
Groceries: $80/week
An investment
What is using your savings to earn extra income.
Common Stock vs Prefered Stock
Common Stock: Right to attend annual meeting & vote on company matters. Each share equals one vote. If company makes a profit, common shareholders will share in the profit after bondholders and preferred shareholders have been paid.
Preferred Stock: Paid First. Less risk as prices tend to be more stable. No voting rights.
Schedule III
Capital One, Barclays, Rabobank, United Bank.
Types of Savings Accounts and their use
TFSA: Tax free savings account, any gains earned are tax free. Limited contribution and no tax return.
RESP - registered education savings plan. Allows parents to invest portion of money to child's education after HS. Grows tax free but when you withdraw you will pay taxes on it.
RRSP - registered retirement savings plan. Pay taxes when you withdraw from it. Contribution is a percentage of your income.
Savings Account - Safe, earns interest (low risk), loses purchasing power due to inflation.
Guaranteed Investment Certificates: Works like savings account with financial institution. Very little risk.
Calculate the Discretionary Income:
Gross income: $63,000/year
Rent: $3000/month
EI: 1.58%
CPP: 5.95%
Income Tax: 15%
Clothing: $200/month
Car Payments: $190/month
Groceries: $80/week
What is $357.18
Money
What is a legal tender issued by the government (coins, bills), used as a standard value, accepted as payment for goods and services.
Discretionary vs Disposable
Discretionary income is the amount of money that is left over after all necessities (rent, food etc.) have been paid.
Disposable income is the money left over after all mandatory government deductions have been subtracted from your pay.
Security features of money discourage
What is counterfeit
Sources of Income
What is Salary (from working), Investments, Self-Employment, Government Transfers (EI)
Iris deposits $18,000.00 in a savings account for 5 years at 3.2% interest. Calculate the simple interest.
What is $2,880 interest. Earning: $20,880
Consumer Credit
What is an agreement in which a borrower receives something of value in exchange for a promise to repay the lender (creditor) at a later date.
Simple vs Compound Interest
Simple: Earned on the principal (initial investment) amount.
Compound: Earned on principal plus interest.
Consumer Credit
Conditional Sales Contract
Consumer Loans
Lines of Credit
Student Loan
Mortgage
Types of Investment Accounts and their use
Corporate Bonds - loans to a corporation. Fixed interest each year.
Stocks - part owner/shareholder of a company. If company is profitable, part of profit will be paid to shareholders.
Mutual Funds - investment option that spreads risk over an assortment of investments and number of investors. (in a pool)
Real Estate - buy property as a form of investment. Dependent on housing market
Iris deposits $18,000.00 in a savings account for 5 years at 3.2% interest. Calculate the compound interest.
Total amount to be repaid: $21,070.31
Compound interest toal: $3070.31