Intro and Budgeting
You should make it a life goal to live ____________.
On less than you make
What are 3 reasons to save?
emergencies, large purchases, wealth building
What writing utensil must you use to write a check?
Pen only
What is insurance?
transfer of risk from you to the insurance company
What are the 3 components of compound growth?
time, money, rate of return
Personal finance is 80% __________ and 20%__________.
behavior; head knowledge
What is the difference between saving and investing?
saving money has NO risk; investing ALWAYS has an element of risk
When do you need to sign a deposit slip?
only if you are getting cash back
When are income taxes due? When might the date be different?
April 15- unless it is a weekend or holiday
When should you start investing?
out of college, living debt free, with 3-6 months of expenses saved up
What are the 4 walls/ things you must pay.
food, utilities, shelter, transportation
Describe the rule of 72
72/interest rate = number of years for investment to double
or
72/years to double= interest rate needed
What is a similarity between a debit card and a check? What is the difference?
both pulled from your checking account; difference is how quickly the money is removed from your account
What is the difference between homeowners and renters insurance?
homeowners covers the house and belongings, renters only covers belongings
What is the difference between a roth and traditional IRA?
both retirement plans- roth is after tax contributions, traditional is pre tax contribution but you pay taxes when you withdraw it
Name the 5 foundations.
$500 emergency fund
Get out/stay out of debt
cash for car
cash for college
build wealth and give generously
Describe the debt snowball method.
-list debts from smallest to largest
-pay minimum on all debts except for smallest
-attack the smallest with intensity
-then attack second one
-every time you pay off a debt, you add its old minimum payment to your next debt payment
What is included in FICA and who pays it?
social security and medicare- both you and your employer pay the same amount
What is the difference between a W-2 and W-4? What is the purpose of each?
W-4: form you complete when you become employed. It tells your employer how much you want to have withheld to prepay for your tax obligation
W-2: form given to you by your employer by Jan 31. It tells you how much you have earned and how much you have had withheld
What are the two markets that stocks are sold on (full names, not abbreviations)
NYSE- New York Stock Exchange
NASDAQ- National Association of Securities Dealer Automated Quotation System
What is a zero based budget and what is the formula?
income-giving-savings-expenses= 0
What are the 5 facots that determine your FICO score
debt payment history, new debt, debt level, debt type, length of debt
What are the 3 types of taxes and give examples of each.
taxes on income- federal or state income tax
taxes on consumption- sales tax
taxes on wealth- inheritance tax
What is the difference between a premium, deductible, and co-pay? How would you get lower premiums?
premium: monthly or yearly payment
deductible: how much you have to pay before insurance kicks in
co-pay: flat fee you pay for an office visit
Increasing your deductible will lower your premiums.
Explain the difference between a stock, bond, and mutual fund and the benefits of each.
Stock: ownership in a company, also known as shares or equity, earn capital gain/loss or dividends
Bond: debt investment where you loan money to an entity, low risk and low return
Mutual Fund: investment tools made up of a pool of funds that invests in a variety of stocks and bonds- diversification, managed by a money manager who decides what to invest in