Money Concepts, Currency & Exchange Rates
Name one difference between a debit and credit card.
Debit uses your own money; credit is borrowed money that must be repaid.
Give an example of a long-term financial goal
e.g., buying a house, saving for a car,
The term for extra money left after your expenses are paid.
Savings
Which earns more over time: simple or compound interest? Explain why.
Compound interest because interest is earned on both the original amount and previous interest.
Name one advantage of a loyalty rewards program and one disadvantage.
Advantage: Earn rewards or discounts
Disadvantage: Can encourage overspending
If 1 GBP = 1.65 CAD, how many British pounds is $825 CAD worth?
825 ÷ 1.65
= 500 GBP
You want to save $376 for a new video game console in 3 months. How much money do you need to save each month?
$125.33 per month
What type of expense changes each month?
A variable expense
John deposits $200 in a savings account that earns simple interest at 5% per year. How much interest will he earn after 2 years?
Answer: $20
(200 × 0.05 × 2)
Name one tactic a store uses to encourage customers to spend more.
Sales, rewards points, ads, packaging, “limited time” deals, etc.
Why is credit considered “borrowing money”? Explain briefly.
Because you must repay the credit card company later, often with interest
Emma wants to save for a bicycle next year. She keeps her money in a savings account that earns interest. Explain why this is better than keeping cash at home.
The money grows over time because of interest; safer than cash at home.
Name one fixed and one variable expense.
Examples of Fixed Expense: Rent, Mortgage, Car loan, Internet subscription
Examples of Variable Expense: Electricity, Water Bills, Groceries, Gas/Transportation Entertainment
Sienna invests $500 for 2 year at 5% interest compounded annually. How much will she have at the end of 7 years?
Principal=500
Interest Rate =0.05
Compounded annually; n=1
Time = 7 years
TOTAL: $703.55
A company charges a $100 setup fee + $12/m for 12 months. Calculate the total yearly cost.
$100 + (12 × $12) = $100 + $144 = $244
Jessica received a gift from her Nonna in Italy. She gave her €6,500. She is going to deposit it in her Canadian bank account. The bank will charge a transaction fee of $50. If the exchange rate is currently 1 CAD = 0.73 EUR, how much will Jessica actually receive in CAD?
6500 ÷ 0.73 = 8904.11
Deduct Fee:
8904.11 - 50
= $8854.11
List two steps to create a clear financial goal.
Decide the amount to save and the timeframe; optionally, specify how you’ll save it.
Dylan earns $520/m. He spends: $200 rent, $80 transit, $60 entertainment, $100 food. How much can he save?
$520 − $440 = $80
Dylan takes a $89,000 line of credit at a compound interest rate of 2.7%, compound monthly.
How much interest will he owe if he takes 5 years to pay it back?
Principal = 89,000
Interest rate = 0.027
Compounded monthly → n =12
Time = 5 years
TOTAL: $12,371
Why is it important to read the fine print when signing up for a subscription service?
To understand fees, cancellation policies, and terms of use.