Budgeting and Goals
What is a short-term financial goal?
A financial goal you can achieve within one year (or a goal you plan to reach in less than a year).
What is the primary purpose of a savings account?
To earn interest and accumulate money over time
When you use a debit card to buy something, where does the money come from?
Your checking account
What does overdraft coverage allow you to do?
Spend more than your balance (usually with a fee)
Describe one effective personal saving strategy.
Pay yourself first, automate savings, budget, track spending
In the 50-30-20 budgeting rule, which category receives the largest percentage?
Needs (50%);
Name two features that a checking account has that a savings account typically does not.
Debit card, check writing, bill pay, ATM access
Give an example of a transaction that would immediately reduce your checking account balance.
Any transaction: debit card purchase, ATM withdrawal, bill payment
You have $25 in your account and opt IN to overdraft coverage. You make a $40 purchase. What happens, and what will you owe the bank?
Transaction goes through; you owe $15 (which is the balance after you take 25 from 40)+ overdraft fee
Why is it important to review your bank statements regularly?
To catch errors, fraud, or unauthorized charges
In the 50-30-20 budgeting rule, which category gets 30% of your income?
Wants
What is a Certificate of Deposit (CD)?
A CD is a savings product where you deposit money for a fixed period of time at a higher interest rate.
You have $50 in your checking account and make three debit card purchases: $15, $20, and $25. If you opted OUT of overdraft coverage, what would happen to the third purchase?
The third purchase would be blocked/declined
What is the FDIC insurance limit per account?
$250,000
What is a P2P payment app, and give one example of how you might use it.
A P2P (peer-to-peer) payment app is a digital service that allows you to send money directly to another person. Examples include: paying a friend back for lunch, splitting rent with a roommate, or sending money to family.
You want to save $5,000 for a laptop in 10 months. How much do you need to save per month to reach this goal?
$500/month
What does FDIC insurance do, and up to what amount does it protect your deposits?
Protects deposits up to $250,000 if bank fails
Name one advantage of using online banking.
Any valid advantage: check balance anytime, pay bills online, monitor spending
Explain one advantage of opting OUT of overdraft coverage.
Avoids fees by preventing overspending
You notice unauthorized charges on your debit card from 3 days ago. What should you do?
Contact bank immediately to report fraud
Explain the difference between a short-term goal and a long-term goal.
A short-term goal can be achieved within one year, while a long-term goal takes several years or more to accomplish.
A bank charges a $12 monthly maintenance fee unless you maintain a $500 minimum balance or set up direct deposit. Name two ways you could avoid paying this fee.
Any 2: maintain 500 balance, set up direct deposit, use online banking
You receive a bank alert that your account dropped below $100 after several ATM withdrawals you don't recognize. What should be your first action?
Contact your bank immediately to report fraud
Why might overdraft coverage be considered a financial trap for consumers, even though it seems helpful?
Encourages overspending and charges high fees
Name three smart banking strategies for managing your money responsibly.
Any 3: emergency fund, track spending, set up automatic payments, review statements, avoid overdrafts