Budgeting
What is the purpose of a budget?
The purpose of having a budget is to have a plan for how you spend your money.
_____________________ is when you use borrowed money with a promise to repay it at a later date
Credit
What is the amount you pay each month for your insurance coverage?
The premium
How do banks make the bulk of their money?
interest (fees), and wealth management accounts
Who needs to file income taxes?
You need to file a tax return if you meet or surpass certain levels of income during the year. If you’re employed, look at your pay stub for the “year to date” income—and if you have more than one job, be sure to add up your income from all your employers and any gig work. Remember to include income from other sources, too, such as money you make on rental property, anything you sell, investments or interest.
What is an emergency fund?
savings you set aside in case of true emergencies, which are large, unexpected expenses that may completely break your budget
What is principal?
the amount of money you borrow
What type of insurance is required by the state of Illinois?
Liability coverage is required in most states if you want to drive. This coverage exists to pay for repairs and medical costs of any property or person damaged as part of an accident that was your fault. If you cause property damage by running into a building or fence, liability coverage will pay for that too.
The FDIC (a federal agency set up to insure bank accounts at no cost to savers) insures up to what dollar amount?
If you have less than $250,000 in your savings account, it has protection from the FDIC (a federal agency set up to insure bank accounts at no cost to savers). This means that putting your money into a savings account has almost no risk – but the interest rate is so low, there is also very little reward.
What months should you expect your employer to send your W-2 document?
January and February.
These expenses are items where the cost stays the same from one month to the next. This means you can reliably plan for these expenditures. They include expenses such as rent, your cell phone bill, or a subscription fee for a video streaming service.
Fixed Expenses
What is the biggest difference between a mortgage and a credit card?
The biggest difference between a mortgage and a credit card is that with a mortgage, you borrow money for a specific purpose.
Is Illinois a no-fault or tort state?
Illinois is an at-fault or tort state. The driver responsible for an accident pays for the injured victim’s damages. To recover compensation, the injured victim will need to file a car accident claim against the at-fault driver’s liability insurance policy.
True or False. FDIC protection only applies to deposits made at any financial institutions – like banks, credit unions, savings & loan institutions, Mobile pay accounts (unless offered by a bank), and cryptocurrency.
False. FDIC protection only applies to deposits made at approved financial institutions – like banks, credit unions, and savings & loan institutions. Mobile pay accounts (unless offered by a bank) and cryptocurrency wallets do not offer this type of protection, putting your deposits at risk.
How long does the IRS recommend keeping tax-related records?
The IRS recommends keeping records for at least seven years.
What is the minimum percentage of your monthly income you should plan to save?
at least 10%
What is the best way to manage credit?
always pay more than the minimium payment
Which of the following will cause your premiums to go up?
using your car for work
taking out a lot of claims for accidents
getting citations and tickets
all of the above:
using your car for work
taking out a lot of claims for accidents
getting citations and tickets
What does “Liquidity” mean?
“Liquidity” means how fast you can convert your investment to cash if you need to spend it.
What is the minimum wage in Chicago?
$16.20 per hour and $11.02 per hour for tipped workers.
What is discretionary income?
Income that a person has to spend after taxes and other fixed expenses have already been paid.
Explain how credit works.
Credit works based on trust. You, as the borrower, ask a lender for a line of credit or the opportunity to borrow money for your own needs. In return, you promise to pay it back.
What will lower your insurance premiums?
garage parking
no/fewer claims filed
bundling
shopping around/ checking to see if you can get a discount
Which of the following is not an investment strategy?
stocks, bonds, real estate, CD's, mutual funds
stocks, bonds, real estate, CD's, mutual funds are all used as investment strategies.
What is Chicago's median income?
$75, 134
*In the United States, it is $39, 982