Economics
What is economics?
Economics is the study of how society manages its limited resources and how people make decisions about production, distribution, and consumption of goods and services.
What makes money valuable?
Scarcity, demand, and government backing make money valuable as a way to store value and exchange it for needed goods and services.
What does inflation measure?
Inflation measures the rate of increase in the overall general price level of goods and services in an economy.
What types of accounts do banks offer?
Common bank accounts include checking accounts, savings accounts, money market accounts, certificates of deposit, and retirement accounts like IRAs.
What are some short term financial goals?
Goals achievable in 1-5 years like saving for a vacation, down payment, or vehicle purchase.
What is currency?
Currency is money in any form when in use or circulation as a medium of exchange. An example is the paper dollar bills and coins in circulation.
What does time do to money?
Over time, the value of money can decrease due to inflation or increase due to earning interest or investment gains. Time also allows compound growth.
How can you protect your money from inflation?
Ways to protect money from inflation include investing, locking in fixed interest rates, earning higher investment returns, and buying hard assets.
What is the difference between a debit card and credit card?
A debit card draws directly from your bank funds while a credit card borrows money that you have to pay back later.
What are some mid term financial goals?
Goals achievable in 5-15 years, including paying off debt, saving for a wedding, or building up a college fund.
What is inflation?
Inflation is the overall general upward price movement of goods and services in an economy. It is measured as the percentage rate of change in prices over time.
What are some ways to earn money?
Some ways to earn money are getting a job, starting a business, selling items, getting investment returns, monetizing a hobby, doing freelance work, or providing services.
What is a personal budget useful for?
A personal budget helps you plan expenses, reduce unnecessary spending, reach savings goals, prepare for emergencies, and achieve better financial health.
What are some benefits of saving accounts?
Benefits include interest earnings, maintaining liquid emergency funds, and saving for specific goals while limiting temptation to spend.
What are some long term financial goals?
Long term goals of 15-30+ years include retirement and saving to buy a house, start a business, or fund a child’s college education.
What is interest?
Interest is the cost of borrowing money or the payment received for lending money over a period of time. It is usually expressed as an annual percentage rate.
What is the difference between cash, credit, and debit purchases?
Cash purchases involve paper money exchanging hands. Debit pulls funds directly from your bank account. Credit allows you to borrow money and pay it back later.
List three common expenses in a budget.
Common expenses in a budget include housing, transportation, food, utilities, healthcare, insurance, entertainment, clothing, and debt payments.
What information is needed to open a bank account?
To open an account, banks need your name, contact info, SSN, ID, initial deposit amount, and proof of identity/permanent address.
How can you reach your financial goals?
Creating a budget, saving/investing a portion of income monthly, paying down debt, taking advantage of an employer's 401K match and/or an IRA are ways to reach financial goals.
What is budgeting, and what is a good budgeting strategy?
Budgeting is creating a plan to spend money in order to achieve financial goals. A good strategy is to categorize expenses, look for areas to save, and stick to the limits you set for each category.
Why is it important to save money?
Saving money gives financial security, allows you to earn interest and reach goals like major purchases or retirement, and prepares you for emergencies.
About how much of a budget should go towards saving?
Financial experts often recommend saving 10-15% or more of your monthly income in order to meet financial goals.
What does FDIC insurance on bank accounts guarantee?
FDIC insurance guarantees the safety of your deposit funds up to $250,000 in the event of bank failure or insolvency.
Why is it important to have both short and long term financial goals?
It creates balance between meeting immediate needs and desires while also planning and saving for major future needs and life changes. It also allows enjoying life now and in retirement.