Understanding Money
True or False
Everyone's budgeting plan WILL be the same
FALSE
What is the difference between a need and a want?
Need= essential for basic survival / functioning
Want= non essential, desire
Name 2 benefits of using a credit card
Build credit (score), earn rewards, cash flow flexibility, fraud protection
You earn $300 from your first job. You want to buy new shoes for $150, but you also want to save money. What would you do?
Answers vary
Emergency Fund should be _____ months of living expenses?
3-6 months expenses
______ - ______ = $ _____ ______
Income - expenses = $ left over
short term, medium term, long term
Name 2 negatives of misusing a credit card
High interest charges, accumulate debt, cost penalties, lower credit score if misused, overspending habits
You have $25 left until payday, and a friend invites you to the movies. Would you spend the money?
Answers vary
This type of banking account helps you earn higher interest to help your balance grow, may require a minimum balance to avoid monthly service charges, and may limit the amount of withdrawals you take out each month
Savings account
Give 3 examples of a FIXED expense
Answers may vary: rent, mortgage payment, phone bill, car insurance, renters insurance, medical insurance, subscriptions, loan payments
What is the GROSS INCOME?
total amount of money earned BEFORE taxes and other deductions taken out
What does the "minimum payment" to a credit card mean?
The minimum amount of money that you are required to pay on your credit card statement each month to keep the account in good standing.
Situation: Your phone still works, but a new model comes out.
Challenge: Decide whether to:
Why?
answers will vary. As long as you explain what you would do and why you get points
What is a high yield savings account
type of savings account that pays a much higher interest rate than a standard traditional savings account. Often pays pays 4% or more.
Give 3 examples of VARIABLE expenses
Answers may vary: groceries, utilities, personal care, transportation (bus tickets, gas), clothing
What is your NET INCOME
total amount of money you take home AFTER taxes and deductions are taken out
What is a credit limit?
The highest amount of money the bank lets you borrow.
You get $500 unexpectedly. Would you spend it now, save it for a goal, split it, or invest it? Why?
Answers vary
True or false
It is the law that taxes be taken out of your paycheck
true
What types of taxes are taken out of your paycheck? (4)
State, Federal, Social Security, Medicare
True or false
You pay the APR if you pay your monthly bill in full before the due date.
Bonus 100pts if you say what APR stands for
False
You do NOT pay APR if you pay your monthly bill in full before the due date.
APR= annual percentage rate