Vocabulary
An emergency fund is typically used for unexpected expenses like dining out or streaming subscriptions.
FALSE!
What are 3 parts of a check?
The address, the name, the account name, the account number, the memo line, the pay to order line, the money written out, the signature line.
What is the "50/30/20 rule"?
A guideline to put 50% of income toward needs, 30% toward wants, and 20% toward savings/debt reduction
What does APR stand for?
Annual Percentage Rate
The price of borrowing money.
Interest
Paying the minimum on credit cards reduces your debt quickly.
FALSE
Name 3 things typically found on a bank statement.
Deposits, withdrawals, fees, account balance
Give an example of a variable expense.
Groceries or entertainment.
A loan that is repaid in equal amounts, over a fixed period of time.
Installment Loan (unlike a credit card which is a revolving line of credit)
Name one action that would hurt your credit score.
Missing a payment, carrying a high credit card balance, applying for too much new credit
Which type of expense is easier to adjust when cutting costs?
Variable expenses.
What type of interest changes on a periodic basis?
Variable interest rate (typically based on prime interest rate)
Is it better to pay off high-interest debt or save money?
Generally, it's best to prioritize paying off high-interest debt because it grows quickly, but still save a little for emergencies.
How many months of living expenses are recommended for an emergency fund?
3-6 months
Paula deposited $10,000 into a savings account. The interest rate was 5.5%. How much interest will she have in 15 years?
$8,250
The amount of income you receive before any taxes or deductions are taken out.
Gross income
A budget should include both fixed and variable expenses.
TRUE
What is the key difference between a secured and an unsecured loan?
A secured loan requires collateral (e.g., a house or car), while an unsecured loan does not)
Briana's monthly income is $4,000. Rent is $1,200, groceries are $400 and other needs $600. According to the 50/30/20 rule, how much should she put toward savings?
20% of $4,000, which is $800
The term for earning or paying interest on the principal amount and on accumulated interest from previous periods.
Compound Interest