Budgeting
What is the Pay Yourself First budget strategy?
What's the difference between a checking and savings account?
Money is taken from checking when using a debit card. Savings accounts typically have higher interest rates.
How can saving be better than investing?
Much less risk of financial loss
What is an example of a regressive tax?
Sales tax, sin tax. They disproportionally effect poorer people.
What is the best budgeting strategy? Explain.
Doesn't matter as long as you ARE budgeting.
What is a downside to being unbanked?
What is a "grace period" when first receiving a credit card?
A span of time where you are not charged interest on your credit card bill.
How can investing be better than saving?
Can make much more over time when investing.
What is a proportional tax?
Everyone is charged at the same exact rate, such as 15%, regardless of income.
What is materialism?
The desire for or fascination with material goods. People who are very materialistic will likely spend more $ on their wants than someone who is not very materialistic.
What are two upsides to traditional banking?
Good for applying for loans, secure, can talk in-person with bankers, widely available...
What is a Schumer Box?
A breakdown of the credit card you are thinking about applying for. Tells you about the APR and more.
Why is it important to diversify your assets?
Don't put all your eggs in one basket. If something goes wrong in one of your investments, then it does not lead to financial ruin.
Who fills out a W-4, and who is it given to?
You (the worker) fills out the W-4 and give it to your boss. The W-4 tells your boss how much of your federal income tax to withhold.
For every paycheck, all of your $ is budgeted to go towards something. Any $ you have left is allocated to your savings (so you are left with $0).
What are two upsides to online banking?
Easy access, available 24/7, don't have to deal with people...
Why is APR important?
It determines how much interest you must pay on your credit card bills.
What does it mean to "diversify assets?"
To build a portfolio that has assets ($) in many different places, like stocks, Certificates of Deposit, etc.
What is a progressive tax?
A tax that takes more money from wealthier individuals than poorer individuals
What is the 50/30/20 budgeting strategy?
50% of budget goes towards needs
30% goes towards wants
20% goes into savings
What are two upsides to credit unions?
The bankers essentially work FOR you, security, meet with them in-person, low fees...
Why is it important to have a high credit score?
You are looked at as trustworthy: receive better loan opportunities
Why is it important to start investing sooner than later?
You gain compound interest on your investments. If you invest early, then will have much more money 30+ years down the road.
Why is your W-2 important for filing your 1040 (taxes)? Be specific!
It tells you your total income and federal income tax withheld