Connections
What is the difference between a savings and checking account?
Checking account - used for multiple transactions (ex: paying bills)
Saving account - used to save money and for minimal transactions (usually no more than 6 withdrawals)
What are the different types of insurances?
Medical, home, auto (car), life, health
What is a budget?
A spending-and-savings plan, based on estimated income and expenses for an individual or an organization over a specific time period.
What is the money market?
Purchase and sale of large volume over short period of time. Usually requires minimum balance and excessive fees
What is a return?
measure of an investment's total interest, dividends and capital gains, expressed as a financial gain or loss over a specific timeframe
Compare and contrast debit cards and credit cards.
Debit card - linked to checking account, money taken out in that moment, does not build credit
Credit card - money borrowed, pay back at end of month, builds credit
What are some credit cards you can apply for?
Student, VISA, MasterCard, American Express, a store credit card (i.e. Macys)
What does it mean to liquidate items?
To sell your items for cash flow / make money
What do you accrue if you do not pay a bill on time?
Late fees
What is typically covered under homeowner's insurance?
Loss and damage of property during a storm, break-in, fire, etc. (protects from unexpected)
What is the difference between an asset and a liability?
As asset generates money, a liability causes you to lose money.
What is the importance in having insurance?
To protect you in case something happens - managing financial risk and protecting assets
What are types of investments?
Stocks, houses, cars, businesses, people. An investment is an asset purchased with the expectation of generating income / appreciating in value over time.
What can be jeopardized if someone steals your identity?
Negative impact credit score, spend / open credit and debit cards, open a line of credit / loan, affect social security number / insurance / pensions
If you get into a car accident and it is the other person's fault, what happens with your car insurance?
No fault accidents - typically car insurance stays the same cost, does not cover cost of damages (other person's insurance does)
At fault accidents - monthly payment increases as you are high risk for an accident, and your insurance has to cover the cost of damages
Stock - you own small portion of a company, grow or decline with resale value, can be high risk
Bond - you loan a company or government money, fixed interest over time, is low risk
Explain the difference between life and health insurance.
Life insurance - covers cost of expenses after you die
Health insurance - helps cover cost of healthcare while you're alive
What is a good FICO (credit) score?
Good 670 - 739
Very good 740 - 799
Exceptional 800-850
What does APR stand for?
Annual percentage rate - percent added to money borrowed; can be interest charges on a credit card, lender fees or broker fees
What does it mean to be at default?
Failure to make required interest or principal payments on debt
Why would someone take a low risk versus high risk investment?
Low-risk investment: give lower returns, but losses are rare
High-risk investment: potential for high returns, but not guaranteed. can also have high losses
Why do people claim bankruptcy?
Unable to repay outstanding debts or obligations - filing for bankruptcy provides relief for people overwhelmed by debt
When you are charged late fees or are overdue on a payment, what are you known as?
Delinquent
What is the period of time after a deadline for an obligation during which a late fee or other action is waived?
What are the different types of loans you can get?
Personal, car, home, student