Budgeting & Finance Habits
What are the 5 foundations?
1. Save a $500 Emergency Fund
2. Get out & Stay Out of Debt
3. Pay Cash for Car
4. Pay Cash for College
5. Build Wealth & Give
A lender who uses deceptive, unfair, or fraudulent practices on borrowers who are desperate for cash
What is the difference between Hard Skills and Soft Skills?
Hard Skills are technical skills that are learned.
Soft Skills are character traits and interpersonal skills that guide how you interact with others
What is a Premium?
the amount of money paid for an insurance policy
What does ROI stand for?
Return on Investment
What is a Zero-Based Budget?
A cash-flow plan that assigns an expense to every dollar of your income, the goal is for the income - total expenses to equal zero
What is collateral?
Something owned that has value that is offered as a security on a debt; if the debt is not repaid as agreed, the item is forfeited to the lender
What is the Proximity Principle?
The idea that you should connect with people who are doing what you want to do and get in the right places in order to find new opportunities related to your dream job
What is a Deductible?
The amount of money you will pay out of pocket before the insurance company will make a payment
What is a Liquid Asset?
Liquid Asset: an asset that can be easily bought or sold
What is an Emergency Fund?
A savings account set up specifically to be used to cover financial emergencies
What is Installment Credit?
a loan for a fixed amount of money that‘s paid back in monthly installments (payments). Once it is paid off, it is done.
What is the difference between an Associate's Degree, a Bachelor's Degree, and a Master's Degree?
Associate's = 2 year degree
Bachelor's = 4 year undergrad degree
Master's = Graduate degree
What is a Beneficiary?
people who are designated by the policyholder to receive the death benefit of a life insurance policy
What is a Bull Market/Bear Market?
Bull Market: when prices in a financial market are on the rise or expected to rise
Bear Market: when prices in a financial market experience a prolonged decline
The percentage of principal charged by the lender for the use of its money is known as what
Interest Rate
What is Revolving Credit?
Credit that automatically renews whenever a payment is made to reduce the debt (like a credit card)
What is the difference between Subsidized and Unsubsidized student loans?
Subsidized = federal student loans that are based on a student’s financial need and don’t accrue interest for a set period of time
Unsubsidized Loans: federal student loans that aren’t based on a student’s financial need and start accruing interest immediately
Name the 3 types of financial institutions that we discussed in class
1. Retail Banks
2. Credit Unions
3. Online Banks
What is Diversification in your Investments?
the practice of dividing the money a person invests among different types of investments in order to lower risk
The average rate of growth for an investment over time; often expressed as an annual figure is known as what...
Compound Growth
What is a credit score used for?
To measure someone's creditworthiness
What is CLEP?
(College-Level Examination Program) a set of tests that qualify students to earn college credit if they pass them
What does FDIC stand for and what does it do?
Federal Deposit Insurance Corporation: independent federal agency that insures deposits in bank accounts up to $250,000
If someone explains a fund's Prospectus, what are they giving you?
a description of the investing strategy the mutual fund management company will use to invest your money