Ch 1- Intro to PF
When talking about personal finance, always remember that you will either manage your money or lack of it will ____________
Manage you
Expense that remains the same month to month
Fixed Expense
What is the most common asset that depreciates?
A car
Credit that automatically renews whenever a payment is made to reduce the debt is called______________
Revolving Credit
What are the 3 types of banks?
Retail, Credit Union, Online
What are the 2 types of money personalities?
spender and saver
What is a discretionary expense?
expense for things you don't need
Interest paid on interest previously earned?
Compound Interest
Describe 2 marketing tractics the credit industry uses to trick people into getting into debt?
Rewards programs, Low introductory interest, various others.
A ______________is a ledger which allows you to keep track of income and expenses in your account. (need the full name)
checking account register
How are assets and liabilities connected to net worth?
Assets - Liabilities = Net Worth
What is a zero based budget?
Income - Expenses = Zero
What are the 3 reasons to save in numerical order?
1. Emergency Fund
2. Large Purchases
3. Wealth Building
List 3 ways the credit card companies make money off customers? (reply with specific answers)
Interest, Annual fees, Overlimit fees, Transfer fees, etc.
Banks promote __________to cover overspending an account and then charge a fee for using it.
Overdraft protection
An expression used to describe a person whose monthly income is devoted to expenses and cannot save.
Paycheck to paycheck
A record that summarizes all of the income and spending over a period of time.
Cash-Flow Statement
What are the 3 questions you ask which helps you determine if something is actually an emergency expense?
Is it urgent?
Is it necessary?
Is it unexpected?
Give 2 reasons why good credit scores are a myth?
It does not tell your salary
It does not tell you your net worth(how much you have in the bank or investments)
What are the 2 federal agencies that insure deposits for credit unions and retail banks
NCUA and FDIC
Give the 5 foundations in numberical order
1. Save for a $500 Emergency Fund
2. Get out and stay out of debt
3. Pay cash for your car
4. Pay cash for college
5. Build wealth and give
What is the envelope system?
A budgeting method using envelopes to represent budget spending categories. Place cash in envelopes and spend so you know how much money is left.
The average rate of growth for an investment over time
Compound Growth
The increase in value of a home over time
equity
What are the people called when they use financial services more than just their savings and checking accounts?
underbanked