Financial Literacy 1
A financial institution that accepts deposits from the public.
A Bank
What are the benefits of financial literacy?
Less debt, higher net worth, less financial struggle, improved household finances
An objective that a person sets affects how they save and spend money. Objectives can be short-term (e.g., buying a computer) or long-term (e.g., saving up for college/university).
Financial Goal
Lauren pays for their book at the bookstore. They use a card that can only be used at a specific store.
What is a gift card.
A paper document that is signed and orders a financial institution to pay a specific amount from the issuer's (person that wrote it) account to the person or organization they are addressing it to.
A check
A thing that is borrowed, especially a sum of money that is expected to be paid back in interest.
An agreement between a buyer and seller to exchange goods or services (including for money).
Transaction
The amount of money the government takes from your annual earnings.
What is income tax?
Bolin pays for a chocolate bar at the convenience store with cash. The chocolate bar costs $2.50. What is the total cost of the chocolate bar?
$2.50 x 0.13 = 0.33
$2.50+0.33 = 2.83
OR $2.50 x 1.13 = $2.83
The total cost of the chocolate bar is $2.85 cash, we do not have pennies anymore.
1) Purchasing a new backpack for school (expense or income)
2) Getting a weekly $35 allowance for doing chores around the house (expense or income)
3) Buying Regino's pizza for $5.00 for lunch (expense or income)
1) expense
2) income
3) expense
A card issued by the bank that allows the holder to transfer money electronically to another account when making a purchase.
Debit Card
Name 2 ways to improve your financial literacy.
Start budgeting, read about finances, take a personal finance class, set financial goals
Aran really wants the new PS5, which costs $500. Aran has $200.00 in his Bank of Walsh. However, he just received a credit card with a $1000 limit. Should Aran use his credit card to buy a PS5? Why or why not?
NO! Aran should not use his credit card because he does not have enough money in his checking account to pay off his credit card bill. He will end up paying interest on the outstanding balance owing on his credit card.
What can be done with your money? (hint - there are 4 ways)
Spend, Save, Invest, Donate
What do you call a budget where your expenses are not more than your income and it allows you to save money for future use?
A realistic budget
I have enough money to pay the balance of my credit card, but I just pay the minimum monthly payment. Is that the best financial decision? True or False
False
Paying the minimum amount is not the best decision. A person is charged interest when their credit card balance is not at 0 by the end of the month.
The definition of maturity in finance.
The date when a bond's principal is repaid with interest.
Name 3 banking institutions in your neighborhood
Answers will vary. Chase, Wintrust, Byline, 5/3 Bank, First Midwest, US Bank
If you make $500 each week and there are 4 weeks in the month, how much do you earn each month? Your expenses are $1300 each month. How much does this leave you for additional spending or to put into savings?
$500 X 4 = $2000
$2000 - 15.22% Federal - 4.99% Province- 3.50% Local -tax 7.8% - $1300 = 133.35
I have $133.35 remaining for additional spending or to put into savings.
1) Money that we receive in exchange for work or investments.
2) Things that one spends money on.
3) An estimate or plan to manage income and expenses over a set period.
1) Income
2) Expenses
3) Budget
List examples of goods and services (3 examples for each category).
Goods are items that are usually (but not always) tangible.
Services are activities provided by other people.
This type of interest is calculated when interest earnings are accumulated over a period of time. The interest is calculated on both the principal amount of money. For example, you have $2,000 in your savings account and it is earning 2% interest per year over 5 years.
Compound interest
after 1st year $2,000 x 1.02 =$2,040.00
after 2nd year $2,040 x 1.02= $2,080.80
after 3rd year
What should your credit card balance be by the end of the month?
It should be $0.00 by the end of the month.
What do you need to consider when making a budget? (hint - there are 3 points)
1) How much I/we earn each week or month (income)?
2) What expenses do I/we have?
3) What do I/we need and what do I/we we want?
Name the different forms of taxes collected in the Canada. (hint - there are 3 different types).
1) Income tax
2) Sales tax
3) Property tax