Vocab 1
tax on wages and salaries to finance Social Security and Medicare costs
Payroll Tax
people who buy goods and services
Consumers
money earned for doing work
Wages
What is the difference between saving and investing money?
Saving money is preventing money from being spent and investing money is taking that saved money and putting it towards something that you can profit from.
Shane wants to open a 401k retirement account to invest his money so that when he retires, he has money to live off of. What is one reason why he isn't ready to open a retirement account?
He spends all of his money from his paycheck every month and isn't saving any money.
A tax on people's earnings--The more money you earn, the more tax you pay. April 15th
Income Tax
Amount of money earned before payroll taxes
Gross Income
a person's income after taxes are taken out of their paycheck
Net Income
Which of these is an example of saving money?
1.Buying shoes that are 20% off on sale
2.Putting the money your grandparents gave you for your birthday in a savings account
3.Buying a house
2
What is one reason an emergency fund is important?
An emergency fund would help you fix your car if it breaks down and needs to be towed.
a tax paid by consumers for items they purchase
Sales Tax
money spent each month
Expenses
A plan for making and spending money
Budget
Which of these is an example of investing money?
A. Saving money in a piggy bank
B. Putting money from your paycheck every month into a retirement account that grows money over time
C. Putting money in a checking account at the bank
B
Aaron was playing football last month and broke his leg. He went to the hospital, got x-rays and got a cast. The bill just came to his house. When he opened it, it said that he had to pay $2436! Thankfully, he had an emergency fund. How is this going to help him?
The emergency fund will help him because he can use the money he had saved in the emergency fund to pay his medical bills.
a tax paid on what someone owns--houses, land cars
Property Tax
a budget where spending and income are equal
Balanced Budget
costs that do not change each month--rent or mortgage, car payment, insurance payment, phone bill, internet bill
Fixed Expenses
Which of these are short-term financial goals? Choose all that are correct.
Buy my mom a birthday present with my own money
Save up money to go to the movies over Thanksgiving break
A.Save up money for college
B.Save up money to buy a car when I get my license
C.Collect change all week so I can buy cookies at lunch on Friday
A,B
Would you rather have a 5% interest rate or a 0.5% interest rate?
I would rather have a 5% interest rate because that will make me more money.
to take out of, or subtract. (Taxes are deducted from your salary.)
Deductions or Deducted
expenses that change from month to month--food, gas, entertainment, clothes, eating out
Variable Expenses
Payment made towards a house
Mortgage
Why does saving money have to happen before you can invest money?
You need to be able to save money so that you can invest it in something that will grow your money, but where you won't be able to withdraw it for a long time.
What is Property Tax
Tax payed for the land that you are buying your house on.