Money Management Basics
Give one example of a lifestyle change you might make if your income decreases.
Move to cheaper housing, reduce entertainment, save less temporarily, etc.
What is the Rule of 72 used for?
To estimate how long it takes money to double
Why do people invest for retirement instead of just saving?
Investing helps money grow faster over time
Which service is commonly offered by both banks and credit unions?
Checking and savings accounts
What is an insurance premium?
The amount you pay to keep your insurance active
What is one of the three main ways people manage money for the future?
Saving, investing, and insurance
Interest based only on the original deposited amount is called what?
Simple interest
When is a Roth IRA taxed?
Before you invest the money
What is one factor someone should consider when choosing a bank or credit union?
Fees, interest rates, convenience, services
What is a deductible?
The amount you pay before insurance covers the rest
Why is it important to have both a savings account and an investment account?
Savings is for safety and short-term needs; investing is for long-term growth
What are the two ways to make money from stocks?
Dividends and capital gains
When is a Traditional IRA taxed?
When you withdraw the money
Why might someone choose an online bank over a traditional bank?
Higher interest rates, 24/7 support, no branch visits
Higher deductible = __________ premium?
Lower
If someone increases their lifestyle, how might your budget change?
You may need to increase your income or tighten your budget
What is the one way to lose money from stocks?
Selling for less than you paid (Capital Loss)
What is a 1040 used for?
To calculate your federal tax liability
What is the main difference between a traditional bank and a credit union.
Credit unions are member-owned
What does liability auto insurance primarily cover?
Damage or injuries you cause to others
The 50/30/20 budget divides your income into three parts. List the three parts and the percentages that go along with them.
50% Needs
30% Wants
20% Savings
A collection of stocks and/or bonds combined into one fund is called what?
A mutual fund
What is the main benefit of tax-advantaged retirement accounts?
They reduce or delay taxes
CD(certificate of deposit) or Money Market Account
Why are insurance companies able to stay in business?
They collect more in premiums than they pay out in claims