Vocabulary
What are the three major asset classes?
Cash
Stocks
Bonds
Why is it important to establish credit?
Buying a Home or a Car
Starting a Business
Applying for a Loan
What is the definition of budgeting?
An estimate of one's income and expense.
What is the definition of savings?
The money, time, or other resource an individual has saved.
You want to buy a $1,200 laptop in six months without using credit. How much should you save per month?
$200 per month.
The insurance policy will pay an amount of a loss as long as you pay the ______—the amount of money you pay out of pocket for your insurance policy to pay the remaining amount.
Deductible
Where can you go to see your FICO Credit Score?
Experian
TransUnion
Equifax
What's the suggested budget guideline, and name all three categories?* Bonus: Provide an example for each category
50% - Needs
30% - Wants
20% - Savings
What two things are required to open a savings account?
A valid ID with a picture
Social Security
Your friend wants you to co-sign their loan, but they have a history of missing payments. What’s the risk?
You are responsible for the loan if they don’t pay, which could hurt your credit.
Tax Deferred vs. Taxed Investments Photo
The chart shows the difference between a $250 a month contribution to a tax-deferred account and a taxable account, assuming a 6% annual return and state and federal marginal tax rate of 30%.
What are two tips Angel mentioned to tackle credit debt?
Pay more than the minimum required.
Pay the credit accounts with high interest rates aggressively.
When creating a budget, should you take into account your Gross Pay or Net Pay and why?
What does HYSA stand for and what is it?
https://www.cnbc.com/select/how-to-use-high-yield-savings-account/
High Yield Savings Account- A high-yield savings account (HYSA) is a type of savings account that pays a higher interest rate than a traditional savings account. You can grow your money faster.
If your credit card limit is $10,000, what is the maximum amount you should use to maintain a good credit utilization ratio?
$3,000 (30% of the credit limit).
What is a Roth IRA?
The Roth IRA is set up for personal retirement planning.
There is bad debt and then there is _____ debt.
*Bonus: What's the difference between bad and ____ credit?
Good.
Bad Debt: Typically higher interest debt, not backed by a value increasing asset, unplanned within your budget. -> store credit, cash advances
Good Debt: An investment -> Education, Business, Home
What does "living within your means" refer to?
Spending less or equal to what you earn and not going into debt.
What type of account locks your money for a set period in exchange for higher interest rates?
A certificate of deposit (CD).
If you make 1,400 every two weeks, how much should you be allocated to your savings using the budget rule?
$140
A strategy for paying down debt that focuses on paying off high-interest debt first. The goal is to save money on interest and get out of debt faster.
What is the difference between a "hard inquiry" and a "soft inquiry" on your credit report?
A hard inquiry affects your credit score and happens when you apply for credit, while a soft inquiry does not affect your score and occurs when you check your own credit or when lenders prequalify you.
What is the difference between a fixed expense and a variable expense?
Fixed expenses stay the same every month (e.g., rent), while variable expenses change (e.g., groceries, gas).
Whats is a 401K and name 1 benefit?
401(k) is a retirement savings account that your employer offers, where you can put money away for retirement without paying taxes on it right now. Instead, you pay taxes when you take the money out after you retire.
1. Automatic Savings
2. Employer Match
Your best friend's birthday is coming up next week, the same time your bills are due. What would you do in this situation, so that you are not breaking the bank?
1. Look for creative DIY gifts to gift
2. Focus on sharing experiences as a gift
- picnic at the park
- making dinner at home together
3. Talk to your friend group about sharing the expenses of a gift to give.