Banking
1. What is the main function of a bank?
To safely store money, offer loans, and provide financial services.
What is a budget?
A plan for how to spend and save your money.
What is credit?
Borrowed money that you agree to pay back later, usually with interest.
What is insurance?
A way to protect yourself financially from unexpected events or losses.
What is investing?
Putting money into something (like stocks) to try to grow it over time.
What is the difference between a checking account and a savings account?
A checking account is for daily spending; a savings account is for storing and growing money.
Why is it important to track your expenses?
To know where your money is going and stay within your budget.
What is a credit score used for?
To show how responsible you are with borrowing money it helps lenders decide if they should loan you money.
What is a premium?
The amount you pay (monthly or yearly) for insurance coverage.
What is a stock?
A share of ownership in a company.
What is a debit card used for?
To spend money directly from your bank account.
What does the 50/30/20 rule mean in budgeting?
50% for needs, 30% for wants, 20% for savings and debt repayment.
What are some factors that affect your credit score?
Payment history, amount owed, length of credit history, new credit, and types of credit used.
What is a deductible?
The amount you pay out-of-pocket before insurance kicks in.
What is the difference between saving and investing?
Saving is safer with low returns; investing can earn more but has higher risk.
What does the FDIC do?
It insures your money in the bank up to $250,000 in case the bank fails.
What is an impulse purchase?
Buying something without planning to.
What is a credit report?
A detailed history of your credit accounts and payment behavior.
Why is health insurance important?
It helps cover medical costs and protects you from high healthcare bills.
What does it mean to diversify your investments?
Spreading money across different investments to reduce risk.
How does compound interest help your savings grow?
It adds interest not only to your original money but also to the interest already earned.
How does present bias affect financial decision-making?
It makes people choose short-term rewards over long-term benefits, like spending instead of saving.
What are two ways to build good credit?
Pay bills on time and keep credit card balances low.
How does insurance help reduce financial risk?
It spreads risk across many people, so you're not stuck paying for big losses on your own.
What are some factors that cause the stock market to rise or fall?
Economic news, company performance, supply and demand, interest rates, and investor emotions.