Intro/Budgeting
What is your scarcest resource and most powerful financial tool?
TIME!
What is a progressive tax rate and example?
People with higher incomes are subject to higher federal tax rates.
Income Tax
What does your credit score measure?
How trustworthy you are financially. How likely you are to get a loan at a good interest rate.
What kind of interest do you pay on a loan?
What is a Money Market Account?
A low risk savings option that requires you to deposit a certain amount and maintain a certain balance. Offers a higher interest rate than a savings account.
List the 5 types of insurance that we covered in class
Life, Health, Auto, Disability, Home/Renters Insurance
What is a budget? Be specific.
A plan for spending AND saving
What is a regressive tax and what is an example?
A Tax that affects lower income individuals more than higher income individuals.
Ex. Sales Tax, excise tax
List 1 benefit of using a debit card and one benefit of using a credit card
Debit- No increase in debt, cannot spend outside of your means
Credit- Builds credit score, allows you to buy something now and pay later
Why do banks give out loans?
They earn interest on loans given out to make money
What is the difference between APR and APY?
APY take compounding into account and APR is just the yearly interest on the principal.
What is the relationship between premiums and deductibles?
The higher monthly premium you pay, the lower your deductible will be and vice versa.
What are the 3 ways to help pay for college that we discussed?
Scholarships, Grants, Work Study Programs
What is a Marginal Tax Rate
The tax rate paid on the last dollar of taxable income. It typically equates to your highest tax bracket.
What is the range for a Fico credit score
How are credit score and interest related?
The higher the credit score, the lower the interest charged on loans
What are the two ways you can make money with stocks?
1. Selling your shares
2. Dividends
What types of insurance would you recommend to a recent college graduate who has no dependents, owns a car, and rents an apartment?
Health, Auto, Renters
Not Life, Home, nor disability
In general, what correlation is there between level of education, income, and unemployment?
More education leads to higher average salaries and lower unemployment.
What is the difference between a W4 and a W2?
W4- estimate of withholdings. Completed when starting a new job
W2- report of withholdings. Sent by companies in January
Why is it better to buy a home rather than rent an apartment?
Paying off a mortgage allows you to build your credit. Houses tend to hold value.
What are the 4 parts of a loan?
Principal
Interest
Term
Collateral
What type of investment would you recommend for a young person who wants to maximize their monetary growth?
Stocks and/or mutual funds
If your car was damaged in an accident, this type of auto insurance has got your back. It doesn’t matter who was at fault while driving. However, if the damage came from something besides a crash, it won’t be around to help you.
What type of auto coverage is being described here?
Collision Coverage
What are the top 3 spending categories of a typical family budget? Double or nothing: Approximately what % do these 3 categories add up to?
Housing, Transportation, and Food
~ 2/3rds of the budget
What 4 taxes are withheld from your paycheck?
Federal Income Tax
State Income Tax
Social Security
Medicare
What makes up the largest part of your credit score? Double or nothing: what is the exact %?
Credit History - 35%
What is the simple interest for a loan of $10,000 used car with an interest rate of 5% for 48 months?
SI = 10,000 x .05 x 4 = $2,000
Rank the following accounts/investment types from lowest potential return to highest.
Stocks, Bonds, Basic Savings Account, Mutual Funds, Certificates of Deposit, Checking Accounts
Lowest- Checking Accounts
Basic Savings
Certificates of Deposit
Bonds
Mutual Funds
Highest- Stocks
Stephen is slowing down as he approaches a red light. He is looking in his mirror to switch lanes and misjudges how close Keisha’s car is, rear-ending her car. Keisha’s bumper will need to be replaced and she is suing Stephen for the damage. What type of insurance could Stephen use to cover this accident?
Liability Coverage