Saving & Budgeting
What is a budget used for?
To track spending and saving money
What’s the main difference between a credit and debit card?
credit is not your money
debit is your own money
Name two of the three types of loans we discussed.
Car, home, student loan
Name one thing taxes pay for.
Infrastructure, schools, public servants (police)
What does APR stand for?
Annual Percentage Rate
Name a fixed and variable expense.
fixed=phone plan,netflix, etc.
variable= gas, groceries,etc.
What happens if you miss a credit card payment?
pay interest, late fee, and affects credit score
How does a high-interest rate affect a loan?
Pay more over time
What is the difference between federal and state taxes?
federal taxes are collected by the federal
state taxes are collected by your state
Why is saving money important?
Emergency funds, big purchases, etc.
What is an emergency fund?
An amount of saved money used to cover unexpected expenses or financial emergencies like job loss, medical bills, or car repairs
What is a credit score?
a three digit number that summarizes your credit worthiness
How do banks make money from loans?
interest accruited
Why do people get tax refunds?
They overpaid in taxes for that tax year
What’s one way to improve your credit score?
Pay in full and on time every month
What is an example of an impulse purchase?
varies
What happens if you max out your credit card?
declined transactions, increased minimum payments, higher interest rates, and a negative impact on your credit score
What is principal vs. interest?
principal is the original amount borrowed, while interest is the fee charged by the lender for lending that money
What happens if you don’t pay your taxes?
Subject to a fine and/or jail.
what is the 50-30-20 rule?
50% goes to needs
30% goes to wants
20% goes to savings
Why is it important to track expenses?
to avoid over spending
How does making only the minimum payment affect you?
lead to accumulating more interest, extending the time it takes to pay off the balance, and potentially impacting your credit score
How can you pay off a loan faster?
making greater monthly payments
What is sales tax, and how is it different from income tax?
Sales taxes are paid by the consumer when buying most goods and services
Income tax is taken directly from your paycheck.
What is the difference between a want and a need?
A need is something essential for survival and well-being, like food or shelter, while a want is something desired, but not essential, like a fancy car or a new phone