Unit 1 - Income
What is the primary purpose of a resume in the job application process?
To showcase qualifications and skills to potential employers
What is a credit score?
A numerical representation of an individual's creditworthiness.
What is the purpose of a checking account?
To manage daily transactions and access funds easily.
What is a budget?
A plan for managing income and expenses.
What is insurance?
A financial product that provides protection against potential future losses.
Name one type of income that is considered taxable.
Wages or salaries.
Name one factor that can negatively impact your credit score.
Late payments, too many accounts open in a short amount of time, credit inquiries, high utilization, etc.
Name one advantage of online banking.
Convenience of accessing accounts anytime and anywhere.
Why is it important to track your expenses?
To understand spending habits and identify areas for savings.
Name one type of insurance that is required by law.
Auto liability insurance.
What is the difference between gross income and net income?
Gross income is the total earnings before taxes and deductions, while net income is what you take home after deductions.
What is the difference between a credit card and a debit card?
A credit card allows you to borrow money up to a limit, while a debit card withdraws money directly from your bank account.
What is compound interest?
Interest calculated on the initial principal and also on the accumulated interest from previous periods.
What is the 50/30/20 rule in budgeting?
Allocate 50% of income to needs, 30% to wants, and 20% to savings.
What is a deductible in an insurance policy?
The amount you pay out of pocket before insurance coverage kicks in.
What are FICA taxes, and what do they fund?
FICA taxes are Federal Insurance Contributions Act taxes that fund Social Security and Medicare.
What is meant by "credit utilization"?
The ratio of your credit card balances to your credit limits.
Explain the difference between stocks and bonds.
Stocks represent ownership in a company, while bonds are loans made to a company or government.
How can impulse buying affect your budget?
It can lead to overspending and disrupt planned financial goals.
Explain the concept of risk management.
Identifying, assessing, and prioritizing risks followed by coordinated efforts to minimize, monitor, and control the impact.
Explain the importance of having a W-2 form from your employer.
It reports annual wages and the amount of taxes withheld from your paycheck, necessary for filing taxes.
Describe how long negative information can stay on your credit report.
Typically, up to 7 years.
What is diversification in investing, and why is it important?
Diversification is spreading investments across different assets to reduce risk.
What is the difference between needs and wants in budgeting? List an example of each.
Needs are essential for survival, while wants are non-essential items.
What is the difference between term life insurance and whole life insurance?
Term life insurance provides coverage for a specific period, while whole life insurance provides coverage for the insured's lifetime and includes a cash value component.