Payday
The amount of your paycheck after taxes and deductions are taken out
Net pay
A loan that does not require collateral is
An unsecured loan
What is the difference in a credit card and a debit card?
A debit card allows you to pay with money you already have, while using a credit card is borrowing money from a lender.
What is a variable expense?
An expense that changes each month so that the amount is not able to be set (i.e. your electric bill).
What is the square footage of a room that is 11.5 feet by 13 feet?
149.5 square feet
Employees who are paid a set amount each year receive a
Salary
What are 2 factors that make loans more expensive than they may first appear.
1) Interest Rate
2) Length of Loan
How many months of expenses should you save for your emergency fund?
3-6 months
What is zero-based budgeting
This method ensures every dollar has a purpose, whether it’s for spending, saving, or investing. This helps prevent wasted money.
The ideal down payment when you buy a house is
20% of the purchase price
Tucker receives $1,600 each month salary plus 5% commission on his sales. If he sells $20,000 of product in one month, how much is his gross pay?
$1,600 + $1,000= $2,600
Why do stores and car dealerships often encourage people to finance (take out a loan) instead of paying in cash?
They make more money from interest and fees! Financing makes things seem affordable with small monthly payments, but in the end, you pay much more than if you had saved up and paid in full.
What is one major downside of keeping all your money in a savings account instead of investing?
Inflation! Over time, prices go up, but most savings accounts earn less than inflation, meaning your money loses buying power if you don’t invest some of it.
What percentage of your budget should you allot for housing?
25-30%
When buying a house, what percentage of closing cost can you expect to pay?
3-6%
Name 3 benefits many companies offer in addition to your paycheck.
Health Insurance
401K
Vacation
Paid sick days/Paid time off
What is a loan “trap” that payday lenders use to keep people in a cycle of debt?
Payday lenders charge extremely high interest rates (often 300-400% APR) and require quick repayment. When borrowers can’t pay it back, they take out another loan, trapping them in a cycle of borrowing and repaying more than they originally borrowed.
What is the main difference between a stock and a bond?
A stock represents ownership in a company, meaning you can make money if the company does well. A bond is like a loan you give to a company or government, and they pay you back with interest. Stocks are riskier but have higher potential returns.
What is the benefit of tracking your expenses regularly?
Tracking expenses helps you see where your money goes, identify wasteful spending, and make adjustments to stay on budget and reach financial goals.
List 3 reasons it would be wiser to rent an apartment instead of buy a home
Short-Term Living Plans – If you plan to move within a few years, renting is better because buying and selling a home involves closing costs, realtor fees, and potential market fluctuations.
Lower Upfront Costs – Renting usually requires just a security deposit and first month’s rent, while buying a home requires a large down payment, closing costs, and maintenance expenses.
No Maintenance Costs – Homeowners must pay for repairs, upkeep, and property taxes, while renters can call the landlord for fixes without extra costs.
Flexibility and Less Commitment – Renting makes it easier to relocate for a job, school, or lifestyle change without the stress of selling a home.
Less Financial Risk – The housing market can fluctuate, and homeowners might lose money if property values drop. Renters don’t have to worry about real estate market risks.
What percentage of your pay is owed for Social Security and what percentage is owed for Medicare? (Hint, if you have an employer, they typically pay half of this cost. If you are self employed, you pay it all yourself.
Social Security: 12.4%
Medicare: 2.9%
What is the average credit card interest rate in the U.S., and how does it make borrowing money more expensive?
The average credit card interest rate is typically between 20-25%. This means if you don’t pay off your balance each month, your debt can quickly grow, making even small purchases much more expensive over time.
What is the key benefit of starting to invest at a young age?
Compound interest allows your money to grow over time. The earlier you start, the more time your investments have to multiply, leading to much greater wealth later in life.
According to a Gallup survey, what percentage of Americans use a budget
32% of American households prepare a written budget or use software for a spending plan.
Imagine you are buying a $175,000 home at 5% down
and 4% closing costs. How much money do you need
to have saved?
$15,750