Budgeting
Costs that stay the same each month and do not fluctuate based on usage or activity.
Examples: rent, mortgage, car payment, insurance premiums.
Fixed Expenses
A savings account that locks your money for a fixed term in exchange for a higher interest rate.
Certificate of Deposit (CD)
The deadline for filing your federal income tax return.
April 15th
3.6%
Credit score range is
300-850
Costs that can change from month to month depending on usage or personal choices.
Examples: groceries, gas, entertainment, dining out, utilities (sometimes).
Variable Expenses
A 12-month CD has an interest rate of 4%. You deposit $5,000. How much interest will you earn if you leave it for the full term?
$200
What are FICA taxes, and what do they fund?
Federal Insurance Contributions Act taxes; they fund Social Security and Medicare.
You deposit $1,000 in a savings account that pays 5% simple interest per year. How much interest will you earn in 3 years?
$1,000 × 0.05 × 3 = $150
Which of the 5 C's of credit refers to the ability to repay the loan
Capacity
If your monthly income is $3,000, how much should you spend on needs according to the 50/30/20 rule?
$1,500
A type of savings account that usually earns higher interest and may offer limited check-writing or debit privileges.
Money Market Account
What does the “C” in FICA stand for?
Contributions
You invest $1,000 at 5% interest compounded annually for 2 years. How much will you have at the end?
$1,102.50
What are the 5 C's of Credit?
1. Character
2. Capacity
3. Collateral
4. Conditions
5. Capital
What does the “70” represent in the 70/20/10 rule?
Living Expenses (Needs and Wants Combined)
What does the FDIC stand for?
Federal Deposit Insurance Corporation
What is the percentage that gets taken out of your paycheck for Social Security?
6.2%
If you invest $1,000 at an annual interest rate of 6%, approximately how many years will it take for your money to double?
12 years
What is Dave Ramsey's financial advice when buying a car?
Pay cash
A budgeting method where you divide your cash into separate “__________” for different spending categories (like groceries, entertainment, and gas). Once the money in an money is gone, you cannot spend any more in that category for the month.
Envelope System
The cost of borrowing money or the reward for saving money, usually expressed as a percentage of the amount borrowed or saved.
Interest
What percentage of your paycheck goes towards Medicare?
1.45%
Alex deposits $5,000 in a 6-month CD with a 2% annual percentage yield (APY). How much money will he have when the CD matures?
$5,050
Emma has three credit cards:
Card A: $2,000 balance, $5,000 limit, 18% APR
Card B: $1,000 balance, $3,000 limit, 22% APR
Card C: $500 balance, $2,000 limit, 15% APR
She wants to pay off her debt using Dave Ramsey’s debt snowball method but also wants to minimize total interest paid. Which card should Emma pay off first and why?
Pay Card C first because it has the smallest balance. This builds motivation and momentum.