Budgeting
What is the term for a detailed plan showing how you will allocate your income for various expenses?
Budget
Explain the difference between a debit card and a credit card.
Debit cards withdraw funds directly from a checking account, while credit cards allow borrowing up to a credit limit.
Define "diversification" in the context of investing.
Spreading investments across different assets to reduce risk.
What is the difference between a tax credit and a tax deduction?
A tax credit directly reduces the amount of taxes owed, while a tax deduction reduces taxable income.
Explain the importance of setting financial goals.
Setting financial goals provides direction and motivation for effective financial planning.
Name the category in a budget that includes spending on non-essential items.
Discretionary spending
What is the term for the interest rate charged by a credit card company on outstanding balances?
Annual Percentage Rate (APR).
What is the difference between stocks and bonds?
Stocks represent ownership in a company, while bonds are debt securities representing loans to entities.
Define the term "W-4 form" in relation to income taxes.
A form employees use to determine federal income tax withholding.
What is the difference between short-term and long-term financial goals?
Short-term goals are achieved in the near future; long-term goals require more time to achieve.
Define "emergency fund" in personal finance.
Savings set aside to cover unexpected expenses or emergencies.
Define the concept of overdraft protection in banking.
A service preventing transactions that would overdraw an account.
Explain the concept of a dividend in stock investing.
A payment to shareholders from a company's profits.
Explain the concept of progressive taxation.
A tax system where higher-income individuals pay a higher percentage of their income in taxes.
Define the term "net worth" in personal finance.
The difference between a person's assets and liabilities.
What is the difference between fixed and variable expenses in a budget?
Fixed expenses remain constant, while variable expenses can change.
What is a FICO score, and how is it calculated?
A credit score measuring creditworthiness, calculated based on credit history and other factors.
Identify two types of retirement accounts and briefly describe each.
Examples include 401(k) (employer-sponsored) and IRA (Individual Retirement Account).
What is the purpose of filing a tax return?
To report income, determine tax liability, and claim any eligible tax credits or deductions.
What are the key components of a comprehensive financial plan?
Budgeting, saving, investing, insurance, and estate planning.
Identify the term for the total amount of money a person earns before taxes and deductions.
Gross income.
Name two advantages and two disadvantages of using credit cards.
Advantages include convenience and building credit; disadvantages include high-interest rates and potential debt.
Define the term "risk tolerance" in investing.
An investor's ability to endure fluctuations in the value of their investments.
Name three types of taxes that individuals may encounter.
Income tax, sales tax, and property tax.
Explain the concept of liquidity in financial planning.
The ease with which an asset can be converted into cash.