Banking Basics
This account is used for everyday spending and has high liquidity.
What is a checking account?
A plan for how you will use your money.
What is a budget?
A rise in general price levels over time.
Inflation
This organization insures bank deposits up to $250,000.
FDIC
Which account should you put money in if you want a higher interest rate than a savings but also want to be able to access it anytime?
Money Market Account
This account earns interest and is best for emergencies or short-term goals.
What is a savings account?
In the 50/30/20 rule, this percentage goes to wants.
30%
The formula I = P × r × t represents this type of interest.
Simple interest formula
This organization insures credit union deposits up to $250,000.
NCUA
You spend more than you have in checking and the bank covers it but charges you.
Overdraft fee
What banking product do you lock your money for a set time to receive higher interest but you'll pay a penalty for early withdrawal.
Certificate of Deposit (CD)
Gas, groceries, and rent fall under this category.
NEEDS
Interest earned on both the original principal and accumulated interest.
What is compound interest?
This agency controls the money supply in the U.S.
Federal Reserve
If you want the biggest ATM network which financial institution should you go with?
This number identifies your bank for direct deposit.
What is a routing number?
If your income minus expenses equals zero, this means every dollar has one of these.
Every dollar has a job
Using the Rule of 72, money earning 8% will double in approximately this many years.
What is 9 years? (72 ÷ 8 = 9)
This agency protects consumer financial interests.
CFPB
You want everything managed from your phone with no physical branches.
Online bank
Which account would be the WORST place to keep money you might need tomorrow?
Certificate of Deposit (CD)
You earn $2,000 per month and save $200. According to the 50/30/20 rule, how much more should you be saving each month?
$200 more.
(You should be saving $400 total)
You earn 8% interest on your investment while inflation is 5%. What is your real rate of return?
3%
You have $975,000 in a single bank account at one bank. If the bank fails, how much money is NOT insured?
$725,000
You earn 10% interest on an investment, meanwhile inflation is 10%. After one year, has your purchasing power increased, decreased, or stayed the same? And why?
Stayed the same. (Your real rate is 0%)