Financial Literacy 101
Define Financial Stability
Feeling confident with your financial situation. Not worrying about paying bills because you know you will have the funds. This includes maintaining savings for the future.
Career vs. Occupation
Career n.,an occupation undertaken for a significant period of a person’s life and with opportunities for progress
occupation n., a job or profession
Define Invest
Invest v., to commit (money) in order to earn a financial return
What is the 50/30/20 Rule?
A. A guideline for how to diversify your investments: by putting 50% in stocks, 30% in bonds, and 20% in high yield savings accounts.
B. A guideline for budgeting that says you should put 50% of your take-home pay toward needs, 30% toward wants, and 20% toward savings.
C. A guideline for how much you should have saved for retirement when you are 50, 30, and 20 years of age.
D. A guideline for budgeting that says you should put 50% of your take-home pay towards saving, 30% towards needs and 20% towards wants.
B. A guideline for budgeting that says you should put 50% of your take-home pay toward needs, 30% toward wants, and 20% toward savings.
Define Asset
An asset is something of value that a person or company owns, like cash, investments, property, or inventory, assets bring money in.
Why are budgets important?
they help individuals and businesses manage their finances by tracking expenses, setting financial goals, allocating resources efficiently, and preventing overspending, ultimately leading to financial stability and the ability to achieve long-term savings goals like buying a home or retiring comfortably.
What are the two main things you need for a job application?
résumé and cover letter.
Simple Interest vs. Compound Interest
How much do financial experts generally recommend that you keep in an emergency savings fund?
A. $20,000.
B. 3-6 months of your gross pay.
C. 3-6 months of your essential living expenses.
D. 3-6 months of your monthly housing or rental costs.
C. 3-6 months of your essential living expenses.
Define Liability
A liability is a financial obligation owed to another party, such as a loan, credit card debt, or accounts payable; Liabilities take money out.
What are 6 main components of financial literacy?
Borrow v., to receive with the implied or expressed intention of returning the same or an equivalent
Earn v., obtain (money) in return for labor or services
Invest v., to commit (money) in order to earn a financial return
Plan v., a detailed formulation of a program of action
Save v., to put aside as a store or reserve
Spend v., to use up or payout, to consume wastefully
What time should you arrive for a job interview scheduled for 11:30 am?
Ideally 11:15am
When it comes to principal and interest rates, compound interest always results in a higher total amount than simple interest.
True
False
It depends on where your money is invested.
It depends on the initial principal invested.
True
What's the largest contributing factor to your credit score?
Debt to income ratio
Payment history
Credit mix
Salary
Payment history
Which of the following is NOT a liability?
A. Mortgage payable
B. Trademark
C. Unearned revenue
D. Accrued expenses
B. Trademark
Explanation
Trademarks are classified as intangible assets, not liabilities. They represent the legal exclusive rights granted to a business to use a particular name, symbol, or design, which can generate significant value and competitive advantage. Unlike liabilities, which are financial obligations to others, trademarks are valuable resources owned by the company.
How many levels of tax are there?
7! Income taxes, payroll taxes, state and local sales taxes, federal and state excise taxes, and local property taxes
what is the Fair Chance Act?
Fair Chance Act: Fact Sheet for Employees
Criminal history can’t be part of the hiring process until after a job offer. That means you get a fair chance, and employers get to consider more candidates.
Employers cannot ask you about your criminal history until after they offer you a job. After an employer offers you a job, they can ask about and consider your criminal history. I
How much is one American dollar worth from 1850?
$1 in 1850 is worth $40.46 today
What is the difference between a High Yield Savings Account (HYSA) and a regular savings account?
An HYSA allows you to put more money into your account than a regular savings account.
A regular savings account is protected by the federal government. An HYSA is not.
An HYSA typically offers a higher interest rate than a regular savings account.
An HYSA requires that you leave your money in for a certain amount of time. A regular savings account lets you take your money out at any time.
An HYSA typically offers a higher interest rate than a regular savings account.
What is depreciation related to?
A. Decrease in liabilities
B. Decrease in owner's equity
C. Reduction in the value of an asset
D. Increase in revenue
C. Reduction in the value of an asset
Explanation
Depreciation relates to the gradual reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset is zero or negligible. It is an accounting method that helps spread the cost of an asset over its useful life, reflecting its consumption, wear and tear, or obsolescence. This process helps businesses accurately report the decreasing values of their fixed assets and reduce their taxable income.
What is the recommended amount that wealth management firms say you should have saved for retirement by the time you turn 30?
1x your salary
2x your salary
3x your salary
4x your salary
1x your salary
The Equal Employment Opportunity Commission (EEOC)?
(EEOC) is a federal agency that enforces laws against job discrimination. The EEOC's mission is to prevent and remedy discrimination in the workplace.
Let’s say you begin to invest for retirement when you begin your career at age 22. If you consistently set aside $100 per month and earn a healthy 10% return on your investment (compounded annually), how much would you have when you reach age 65?
$710,810.83
What is the difference between a stock and a bond?
Stocks are loans to a company or the government. Bonds are partial ownership in a corporation.
Stocks are partial ownership in a corporation. Bonds are loans to a company or the government.
Stocks are less risky than bonds.
Stocks are long-term investments. Bonds are short-term investments.
Stocks are partial ownership in a corporation. Bonds are loans to a company or the government.
Is a car a asset to liability?
A car can be both an asset and a liability, depending on the circumstances.It can be an asset because it has value and can be sold for cash, but it can also be a liability because it has ongoing costs.