Financial Institutions
This type of financial institution is owned by its members and returns profits through better interest rates and lower fees rather than paying shareholders.
What is a credit union?
This simple principle encourages setting money aside regularly instead of spending it all at once.
What is saving?
Before buying a new pair of shoes, Maya checks two stores and compares prices online. She is practicing this smart shopping behavior.
What is bargain shopping?
A detailed plan showing how you’ll use your income to cover expenses and savings over a certain period.
What is a budget?
Items you own that have value, like a car, house, or savings account, are known as these.
What are assets?
Sasha travels internationally and needs access to her money anytime, anywhere. This type of bank operates entirely online and fits her needs best.
What is an internet bank?
Saving money for emergencies, like unexpected car repairs or medical bills, is one of the smartest financial decisions a person can make. Experts recommend having three to six months of expenses set aside in this type of fund.
What is an emergency fund?
Jordan wants a new phone but realizes buying it now would mean not having enough for gas next week. He decides to wait until payday. This shows the importance of considering this trade-off when spending.
What is opportunity cost?
The first step in building a budget is identifying all money coming in, whether from wages, gifts, or side jobs.
What is examining cash flow?
Money you owe on credit cards, loans, or other debts are known as these.
What are liabilities?
These institutions hold and transfer money, offer checking and savings accounts, issue loans, and exist to make a profit for owners or shareholders.
What are commercial banks?
Omar uses this card linked to his checking account for purchases. It pulls directly from his balance rather than borrowing money.
What is a debit card?
Olivia’s friends convince her to buy concert tickets even though she hadn’t planned to and it wasn’t in her budget. She later regrets the decision. This type of spending is often driven by emotions or peer pressure.
What is impulse spending?
When expenses exceed income, this negative financial pattern can lead to debt if not corrected.
What is negative cash flow?
Jordan adds up the total value of everything he owns and subtracts what he owes. The result shows his financial position called ______.
What is net worth?
When you deposit money into your account, this federal agency protects it (up to $250,000 per depositor) in case the bank fails.
What is the Federal Deposit Insurance Corporation (FDIC)?
This mathematical shortcut helps estimate how long it will take for an investment or savings account to double in value, based on the interest rate.
What is the Rule of 72?
To create focused goals like “save $500 in three months,” financial planners recommend using this goal-setting method with five characteristics: Specific, Measurable, Achievable, Relevant, and Time-Bound.
What are SMART Goals?
Evelyn prefers to track her spending manually in a notebook where she records every deposit, check, and purchase. This record is known as a ______.
What is a transaction register?
A person with $25,000 in assets and $15,000 in liabilities has this amount as their net worth.
What is $10,000?
James sells his car online and wants the buyer’s payment to transfer safely and instantly between accounts. He uses this method of moving funds electronically.
What is an Electronic Funds Transfer (EFT)?
Interest can either grow your money or your debt over time. When the interest you earn or owe begins earning interest itself, this is called ______.
What is compound interest?
Quinn realized she spends far too much on takeout and social outings, which are examples of this type of expense that changes from month to month.
What are variable expenses?
Ken’s lawn-mowing business must monitor the money coming in from customers and the money going out for gas, equipment, and advertising. This movement of money is called ______.
What is cash flow?
Paying off debt or increasing your savings does this to your overall financial health because it changes the relationship between your assets and liabilities.
What is increases your net worth?