Credit & Debit
Credit refers to the ability to borrow money or access goods or services with the promise to _______.
Pay it back or pay it later.
What is a common way people get into debt?
Loans
What is the difference between a salaried job and an hourly job?
Salary - Fixed monthly pay
Hourly - Income depends on hours worked
Why is it important to track your spending?
Regularly reviewing your spending and staying organized helps identify areas to cut back and helps you stick to financial goals.
Debit refers to money that is withdrawn directly from your______ ______.
Bank account.
Give an example of good debt.
Good debt is often considered an investment that can help you build wealth or improve your financial situation in the long term—such as a mortgage or student loan.
What is a con to having a job like freelancing or contract work?
Unpredictable income, no job security
Two types of life insurance.
What is Cash Value and Term?
Name one benefit of using your debit card?
-Direct access to your checking or savings account funds.
-When you swipe a debit card, the funds are immediately deducted from your account, which means you can only spend what you have available.
-Unlike credit, debit takes the money immediately.
-Makes it easier to track your spending and ensures you don’t accumulate debt, since you can’t spend more than what’s in your account.
-No Interest: No borrowing is involved, so there's no interest or debt to repay.
Give an example of bad debt.
Bad debt typically comes from borrowing money for consumption or non-essential purchases—like credit card debt or payday loans.
What's an example of passive income?
Selling things online, a YouTube channel, buying a house and renting it out to people, investing in stocks.
What is the 50/30/20 rule?
50% for essentials like housing and groceries.
30% for discretionary spending (wants)
20% for savings or debt
What is interest?
Interest rates are the costs lenders charge for allowing you to borrow money. They’re usually expressed as an annual percentage rate, or APR.
How can having a low credit score affect you?
Your credit score can affect everything from loan approvals to housing opportunities, insurance rates, and even job applications.
What is the benefit of having an unpaid internship?
Gain experience and networking opportunities.
How many months of living expenses should you have saved up?
Aim to save 3-6 months of living expenses.
This helps cover unexpected events like medical bills or car repairs.
Explain how to use a credit card wisely.
Purchase items within your credit limit and pay the dues at the end of the month. Requires responsible spending as credit debt can be very detrimental to your finances.
How can you avoid the "Snowball Effect" of growing debt?
A solid repayment strategy.
What is a con to investing in stocks?
Risk involved, requires knowledge of stock markets
Why is it important to focus on paying off your debt?
Reducing debt saves money on interest and improves credit score.