Values & Money
the study of choices we make because resources (like time, money, and stuff) are limited, while our wants are not.
What is economics.
The ability to borrow money with the promise to repay it later.
Credit
This type of tax is taken directly out of your paycheck.
Income tax.
This acronym identifies the government agency that collects federal taxes and uses W-2 information to verify income.
IRS
This is the original amount of money borrowed, not including interest.
Principal
Behavioral economics recognizes that real people are influenced by emotions, habits, and this factor when making decisions.
Cognitive biases
This number summarizes how responsibly someone has used credit in the past.
Credit Score
This form reports how much you earned in wages from an employer during the year.
W-2
This term describes the total amount of money you earn before any taxes or deductions are taken out.
Gross pay.
This factor has the biggest impact on how much you end up paying over the life of a loan, even if monthly payments look small.
Interest rate
Traditional economics often focuses on what people should do to maximize benefits.
Paying only the minimum amount due on a credit card usually causes this to happen.
You pay more interest over time.
This tax is charged on earnings from investments like stocks or real estate sales.
Capital gains tax.
This term describes the income ranges that are taxed at different rates.
Tax bracket.
Two people apply for the same loan, but one pays much more over time because of this difference in their financial profile.
Credit score
___________ economics assumes people make rational decisions based on logic and complete information, while __________ economics recognizes that emotions, habits, and cognitive biases often shape how people actually make financial choices.
Traditional; behavioral.
Most U.S. credit scores fall within this overall number range.
300-850
This payroll tax helps fund Social Security and Medicare.
FICA tax.
This term describes the money you actually receive after taxes and deductions are taken out.
Net pay
This type of loan requires something valuable, like a car or house, as security.
Secured loan.
This ratio compares how much credit you’re using to how much you’re allowed to use and strongly affects credit scores.
Credit utilization.
This is a set amount of income that can be subtracted before taxes are calculated, reducing how much income is taxed.
Standard deduction
This tax form tells your employer how much federal income tax to withhold from your paycheck.
W-4
This loan feature allows borrowers to temporarily pause payments, often increasing total interest paid.
This factor accounts for 35% of your overall credit score.
Payment history - Pay your bills on time!
*Extra 100* - Ms. Bri's credit score always hovers in the ______ to _______ range.
This annual period usually takes place in the spring and involves filing tax forms with the government.
Tax season
A borrower with a lower credit score pays more over the life of a loan primarily because of this.
Higher interest rate