Financial Literacy
What is an asset?
Anything of value that can be converted into cash, including property, investments, and cash itself.
What is a need?
Something you need to have in order to live.
What is a debit card?
A card that gets charged right after you swipe and it comes from your checking account.
What is a "budget?"
Your plan for spending, saving, and donating.
How you plan to spend your money.
The price you pay to borrow money or the cost you charge to lend money.
What is Interest?
What does "net worth" mean?
The value of your assets minus your liabilities. It represents your financial standing at a specific time.
What is an example of a need?
Food, clothes, water, shelter
What is a credit card?
A card that you use to buy something, but you have to pay back because it's not your money.
What are "expenses?"
Money spent on needs (essentials like food) and wants (non-essentials).
What is a PELL Grant?
A federal government-funded financial aid award that helps low- and middle-income undergraduate students pay for college.
What is "inflation?"
The rate at which the prices for goods and services increase over time, which reduces the purchasing power of money.
You just got your license and a car. What else do you need in order to drive legally in the state of California?
Liability car insurance. California's minimum car insurance requirements are $30,000 per person/$60,000 per accident for bodily injury and $15,000 for property damage.
This happens if you don't make your credit card payment on time.
A late fee will be charged.
What is a "loan?"
A specific amount of money borrowed from a financial institution that must be paid back, typically with interest
What is a scholarship?
A scholarship is a form of financial aid awarded to students for education that does not need to be repaid.
Name two services banks provide that deal with money.
Savings account, checking account, loans, debit and credit cards
You have a loan with the bank for $10,000. Do you only pay back $10,000? Explain your answer.
No, you have to pay the bank back the money borrowed plus interest.
What is a financial "investment?"
An investment is an asset or property acquired to generate income or appreciate in value (i.e. be worth more in a few years)
What is an "emergency fund?"
Money saved specifically to cover unexpected expenses, such as medical bills or job loss.
The percentage that a lender charges the borrower for a loan.
What is Interest Rate?
What is a "liability?"
Any money owed to another party.
You just received your first debit card. What happens when you use your card for a purchase?
The money comes out of your checking account to pay for the purchase.
What is a savings account?
A bank or credit union account for storing money while you earn some interest from it. Typically easy access but restrictions on number of withdrawals.
What does "tax-deductible" mean?
A deduction is an amount you subtract from your income when you file so you don't pay tax on it. By lowering your income, deductions lower your tax.
The formula for calculating simple interest.
What is I = PxRxT