Income
What is self-employment income?
Money you earn by working for yourself instead of for an employer (includes gig work, small business, freelancing, etc)
Why do taxes exist?
Taxes are part of participating in an organized society where shared systems/public services must be funded
What is installment credit?
Installment credit is when you borrow a fixed amount of money and pay it back in equal, regular monthly payments. (Ex: loans, mortgage, etc)
What is insurance?
Insurance is a financial system designed to protect people from large, unexpected costs that could seriously damage their finances.
What is the 20 in the 50/30/20 budget?
Savings
What is passive income?
Money you earn with little to no ongoing effort after an initial investment of time or capital, unlike earned income from a regular job
What levels of government collect taxes?
All of them- local, state, and federal
What is collateral?
Collateral is a valuable asset, such as a home or car, pledged by a borrower to a lender to secure a loan, which the lender can seize if the borrower fails to repay the debt. This helps the lender reduce the risk and can help the borrower get lower interest rates.
What is premium and deductible?
Premium the amount you pay to the insurance company regularly to have it. Deductible is the amount of money you must pay out of pocket before insurance covers anything for you
What happens if you only pay the minimum for a credit card balance?
You must pay at least the minimum, but if you don’t pay in full, the leftover balance carries over to the next month and begins collecting interest.
What is net pay?
The amount of money after taxes/deductions aka "take home pay"
How are income tax and payroll tax collected for most workers?
They are automatically withheld from paycheck
How do you spot predatory lending?
Extremely high interest rates, will lend you money even if you have a bad credit score and low income, approval is too easy, etc
What demographic has the highest insurance rates? Why?
Teenage, males because they are the riskiest drivers and more likely to get into an accident
What are the main types of bank accounts?
Checkings account, savings account, CDs, Money Market Account
What are paystubs?
Paystubs are documents that come with a paycheck and explain exactly how your pay was calculated. It shows your gross pay, deductions, and net pay.
What is a tax return?
A tax return is the required set of forms you submit to usually once a year. After filing, you may get a refund if too much tax was paid, or you may have to pay more if not enough was withheld.
What is a debt snowball?
Repaying from smallest balance owed to largest
Where does insurance fit in the 50/30/20 budget?
Insurance is a fixed expense (you pay the same premium every month) which is a need. It falls in the 50 of the 50/30/20 budget
How much does FDIC insure per person per bank account?
$250,000
How are paychecks commonly given to workers?
Through a paper check or direct deposit
If self-employed people don't have employers to automatically withhold taxes, then how do they pay them?
ecause there is no employer to withhold taxes, a self-employed person must calculate and pay this tax on their own, usually by making quarterly estimated tax payments to the IRS during the year.
What is APR?
APR stands for Annual Percentage Rate which shows the yearly cost of borrowing money. While interest rate tells you the cost of borrowing money, the APR includes any extra hidden fees
What is policy limit?
The maximum the insurance company will cover
What are overdraft fees?
An overdraft happens when you spend more money than you have. The bank allows the transaction anyway. The bank charges a large fee