Budgeting & Saving
What is the purpose of an emergency fund?
To cover unexpected expenses, like medical bills or car repairs
What is a credit limit?
The maximum amount of money you can borrow on a credit card or credit line
A share of ownership in a company
What is the difference between gross and net income?
Gross is before taxes/deductions; net is what you take home
What is phishing?
A scam where fraudsters trick people into giving personal information via fake emails or websites
How does inflation affect savings over time?
Reduces purchasing power of money over time
Name one factor that affects your credit score
Payment history, credit utilization, length of credit history, types of credit, new inquiries
What is the difference between stocks and bonds?
Stocks represent (partial) ownership; bonds are loans to a company or government
What is the difference between federal and state income tax?
Federal tax is nationwide; state tax varies by state
Why should you avoid using public Wi-Fi for online banking?
Hackers can intercept and steal information
What is the difference between a checking and saving account?
Checking is for daily transactions; savings is for storing money with interest
What is a credit score and what is it's range?
A number representing creditworthiness in the range 300-850
What does "diversification" mean in investing, and why is it good?
Spreading investments across different assets, which minimizes risk.
What does "tax deductible" mean?
A expense that reduces taxable income, lowering tax owed
What is a Ponzi scheme?
A fraudulent investment scam that pays returns to earlier investors using new investors' money
Name two types of expenses in a budget
Fixed (such as rent, utilities) and Variable (such as groceries, entertainment, gas)
What does APR stand for, and why is it important?
Annual Percentage Rate; it determines the cost of borrowing on credit
How is a Roth IRA different than a 401(k)?
Roth IRA contributions are made after-tax, with withdrawals in retirement being tax free. 401(k) contributions are made pre-tax, reducing taxable income now, but withdrawals in retirement are taxed as regular income
What is a W-2?
A tax form showing wages and taxes withheld by an employer
Report it to the bank, freeze the card, check statements