Banking
A savings account is used for
It is used for future and emergency expenses.
What is the 50/20/30 budget?
50% to needs, 20% to savings, and 30% to wants
APR stands for
Annual percentage rate
What is insurance?
A contract for financial protection from risk of loss.
What is a stock?
A share of ownership in a company.
How can you keep track of your accounts?
Bank statements
What are the expense categories?
Rent, transportation, food, healthcare, education, clothes, entertainment.
What does a credit card represent?
A short term revolving loan.
What’s co-insurance?
When you pay for medical expense after meeting deductible
Explain the difference between the two trends in the stock market.
Bull market: increasing
Bear market: decreasing
What happens if you don’t keep track of your balance?
You receive bounce checks and big fees.
What is a sunk cost fallacy?
Continuing an investment because of past costs, and not future benefits.
Name a few types of loans
Collateral, secured, and unsecured.
Define what an actuary, broker, and an underwriter do.
Actuary: Professional who analyzes risk & calculate premium needed to cover potential loss payments.
Broker: Imsurance agent salesperson.
Underwriter: Recieves premium in exchange for covering potential financial losses.
What is diversification?
Spreading investments to reduce risk
How much % of income should you put straight into your savings?
20%.
How does behavioral economics affects budgeting decisions?
Biases can lead to poor spending choices, such as impulse buys.
What are some things to consider when getting a credit card?
Annual fee, APR, penalty rates, late fees and grace period.
What types of insurance are there?
Auto, renters, home, health, and pet insurance.
3 ways to reduce investment risk are
1. Long the horizon
2. Mix of types of companies
3. Spread buys over time
What are 5 common banking fees?
Out-of-network ATM fee, excessive transaction fee, overdraft fee, insufficient funds fee, and wire transfer fee.
How can loss aversion influence economic behaviors?
Loss aversion can lead to people holding onto investments which are failing or avoid necessary risks, such as investing for retirement, due to fear of losing money.
What are 4 ways young people can get credit?
Getting a co-signer, a starter card, paying student loan interest, and by being an authorized user.
What are 5 factors that determine auto insurance rates?
Deductible, make, model, year, the mileage your drive, your driving record, and your personal information.
The difference between a stock and a bond is
A stock is ownership in a company and a bond is a loan to a company.