Credit
What is credit?
to borrow money now and pay it back later
What is a budget?
A plan for how you will spend and save your money
What does “pay yourself first” mean?
Automatically setting aside money for savings before spending on anything else
What is the difference between a checking and savings account?
Checking is for everyday spending; savings is for storing money and earning interest
Name two factors that affect your credit score
Payment history, credit utilization, length of credit history, credit mix, new credit inquiries.
Name two examples of a monthly expense a college student might have.
Rent, groceries, phone bill, transportation, subscriptions, etc.
What is an emergency fund?
Money saved specifically for unexpected expenses like a car repair, medical bill, or job loss
What is a routing number used for?
it identifies your bank and is used for direct deposits, wire transfers, and setting up automatic payments
What is considered a “good” credit score range?
670-739
What does the 50/30/20 rule mean?
50% of income goes to needs, 30% to wants, and 20% to savings or paying off debt
What are examples of investing?
Putting your money into something (like stocks or a savings account) with the goal of growing it over time
What does FDIC insured mean?
Your money in the bank is protected by the federal government up to $250,000 if the bank fails
What happens if you only pay the minimum balance on your credit card each month?
You get charged interest on the remaining balance, which means you end up paying more than the original purchase price over time
What is the difference between a need and a want? Give one example of each.
A need is something essential to survive (rent, food); a want is something you’d like but don’t need (eating out, new clothes)
What is compound interest?
Earning interest on both your original money and the interest it has already earned your money grows faster the longer it sit
What is overdrafting a bank account?
Spending more money than you have in your account, which can result in fees from your bank