Wages and Paychecks
What is the difference between gross pay and net pay?
Gross pay is earnings before deductions; net pay is take-home pay after deductions.
What is the purpose of a budget?
To plan and manage income and expenses to stay out of debt
What is the primary purpose of a bank?
To safely store money and provide financial services.
To take deposits and make loans
What is the minimum payment?
The smallest amount required to be paid each month on a credit card balance.
What does insurance protect against?
Financial loss from risks or accidents.
Diane earns $35/hour and works 36 hours. What is her gross pay?
$1260
In a 50/30/20 budget, what percentage goes to savings?
20%
What organization protects money if a bank fails?
FDIC
What is a credit limit?
The maximum amount that can be borrowed on a credit card.
What is a deductible?
The amount paid out of pocket before insurance covers costs.
What is “time and a half”?
Overtime pay equal to 1.5 times the normal hourly wage.
Give one example of a need and one example of a want.
Need = housing/food; Want = subscriptions/eating out.
What is the difference between simple and compound interest?
Simple interest is earned only on the principal; compound interest earns interest on principal and previous interest.
What are the three major credit bureaus?
Equifax, Experian, and TransUnion.
What type of loan is used to buy a house?
A mortgage.
Joe earns $18/hour and works 46 hours with overtime after 40 hours. What is his gross pay?
$936
What budgeting strategy means income minus expenses equals zero?
Zero-based budgeting
Mabel deposits $3,120 at 1.5% simple interest for 5 years. How much interest will she earn?
$234
A phone costs $789 and minimum payments total $1,260 over time. How much extra was paid?
$471
Janet buys a $175,000 house with a 25% down payment. How much is the down payment?
$43,750
A job pays $53,000 annually with bimonthly paychecks. How much is each paycheck before deductions?
About $2,208.33
Mia earns $68,000 per year. About how much per month should she budget for needs using the 50/30/20 rule?
About $2,833 per month.
What is a good rule of thumb for an emergency fund?
3–6 months of living expenses.
A credit card balance starts at $3,672.90. After a $320 payment, $78.69 purchase, $300 cash advance, and $120.96 interest charge, what is the new balance?
$3,852.55
A 25-year mortgage has payments of $1,100/month. What is the total repaid?
$330,000