Components of a Paycheck
What is the difference between gross and net income
Net income - Take home pay, or gross minus deductions
Define FOMO and give an example that involves MONEY
This refers to the anxiety that one might miss an opportunity for social engagement or investment.
What is the difference between fixed and variable expenses, give an example of each
Fixed- consistent expense every month (rent subscription)
Variable -m more unpredictable and expenses that are different every month
Give 2 examples of why someone would pay/earn interest
Paying back a loan, receiving a loan back
Investing, savings account, and more
Why don't people save? Give 2 reasons.
•Want everything NOW!
•Don’t see the benefit of saving
•No incentive to save
•Not focusing on the future…
FICA tax consists of ____
Medicare and Social Security
What is the sunk cost fallacy?
Reluctancy to abandon a strategy or action because a lot of time has already been invested into it
How do you calculate savings
Total income - Total expenses
What is the Rule of 72
The rule of 72 is a simple formula to estimate how long it will take for an investment to double at a fixed annual rate of interest, calculated by dividing 72 by the interest rate. ONLY COMPOUND INTEREST
What are the 3 types of goals? Be specific and give an example of each
Short term- Less then 1 year
Medium term 1-3 years
Long term - More than 3 years
Name 2 types of retirement plan
Pension
Roth IRA
401(k)
What is the main difference between Traditional Economics and Behavioral Economics?
Traditional Economics assumes humans are rational, predictable, and objective.
Behavioral Economics challenges traditional economics that assumes people are always rational and act in their best interest. People are irrational, emotional based, and unpredictable.
Cash Inflow - Any Income
Cash Outflow - Any Expenses
Lune puts $1,000 into a savings account that earns 5% simple interest per year. How much interest will she earn after 3 years?
$150
The next-best alternative a person gives up in making a choice.
Name the 4 different ways people can get paid
Wage
Salary
Commission
Tips
Explain Mental Accounting and give one example
Separating money into different categories in your mind
What is the difference between Net worth and Cash Flow (Think Time)
Net worth- a POINT in time
Cash Flow - a period of time
What is the formula for simple interest
Principle x Rate x Time
When does a Cost occur, and is it certain. What about Benefits.
Cost occurs NOW and is certain.
Benefits occur in the FUTURE and is NOT CERTAIN
Sciel works at the card shop for 47 hours.
Her pay is $30 an hour
How much will Sciel's paycheck be (before taxes)
30x40=1200
Overtime: 30*1.5 = 45
45*7=315
1200+315= 1515
ANSWER: $1515
Give an example of Transactional Utility
Transaction utility is the pleasure or displeasure consumers feel from the financial terms of a deal itself, separate from the value of the product they acquire.
Name 3 types of income someone can recieve
Take home pay
Interests and dividends
Profits on stock sales
Lottery winnings
Tips
And More! Any money you earn or recieve
What is the difference between simple interest and compound interest
Simple interest takes interest on the same principle every time interest is accrued
Compound interest is interest on top of interest -- When you earn money from interest, that becomes the new principle
What does each letter of SMART mean
Specific
Measurable
Attainable
Relevant
Timebound