Banking Basics
What is a difference between checking and savings accounts?
Checking Accounts-used for every day purchases, allows you to keep money in a bank so it is safe and easier to track than cash
Savings Accounts-used for goals, a place to put money so it's safe and can earn you interest
What is the number 1 rule of investing?
Buy low and sell high
What is credit?
Borrowing money with the promise you will pay it back
When is tax day?
April 15
List the words that go with the following definitions:
1) Amount paid to the insurance company for insurance coverage
2) Amount of money paid before insurance will pay something
3) A contract written to protect people from specific future losses
1. Premium
2. Deductible
3. Policy
Explain why it is important to start saving/investing for retirement when you’re young, even though retirement is likely decades away.
Using the 50/30/20 rule, how much should I be saving if my net pay is $3,468?
$693.60
What is one big difference between investing and savings accounts?
Investing is for long term goals (retirement)
Savings is for shorter term (car, college, house, etc)
*investing higher risk, but also can have higher reward
What is the range for credit scores?
300-850
What forms are you, the employee, responsible for filling out when you first start a job?
What type of car insurance is required?
Liability
What are the 3 Cs of Creditworthiness? Give a brief explanation of each.
Character-how trustworthy are you
Capital-assets-what can you put up as collateral if you have no income
Capacity-where is your current income tied up-kids, bills, other debt, etc
What does the savings strategy "pay yourself first" mean?
It means before paying for any wants, you put money into savings. This helps you start saving and have money incase something happens.
This type of retirement account is a great thing to take advantage of if offered because your employer will often MATCH your contribution.
401k
What are advantages to having a good credit score?
-lower interest rates when borrowing
-better job opportunities
-ability to get loan on your own (with lower interest rates)
-more independence
What form(s) do we need to file a tax return?
W2 (summary of earnings and deductions from the year)
1099 (like a W2, but you were not an employee of the company they hired you to do a job)
Name 2 factors that affect how much you pay for insurance premiums
age, gender, drivers education, grades, where you live, how much you drive, age and model of car, credit score, marriage status, number of drivers on a policy, driving record
If you have a car loan what types of coverage do you need?
Liability, collision, and comprehensive
3-6 months living expenses
What is the difference between a stock and bond?
A stock represents ownership in a company, meaning when you buy a stock, you are buying a piece of the company, while a bond is essentially a loan you give to a company or government, where you are essentially lending them money and receiving fixed interest payments over time; stocks are considered riskier than bonds but have the potential for higher returns, while bonds are generally considered a more stable investment with lower potential returns.
What can you do to help improve your credit score? list 2 things
-pay bills on time
-use 30% or less of available credit-keep low balance and pay back
-if you do open a line of credit use it and pay bill on time
-Don't open a bunch of credit cards or apply for a ton of loans within a short period
-limit hard inquires
What are 2 mandatory and 2 discretionary expenses our tax dollars pay for?
Mandatory-social security and Medicare
Discretionary-military, education, environment, agriculture, transportation, unemployment
Someone broke into Sam’s car by smashing the passenger window. Which type of auto insurance coverage will help cover the cost to get the window replaced?
Comprehensive because it was uncontrollable
Name two reasons why it is important to check your bank statements on a regular basis.
You purchase 100 shares of SoFi Technologies for $45/share. One year later, you sell the shares for $52/share. What was your TOTAL GAIN for your investment in SoFi Technologies?
$700
Why do we get charged interest when using credit?
We don't pay our balance in full
Jordan is 18 years old and lives in an apartment with 2 roommates. Jordan works construction full-time. Jordan made $44,310 last year. Can Jordan be claimed as a dependent? Is Jordan required to file a tax return. Explain
Jordan CANNOT be claimed as a dependent she is living on her own.
Required to file because she made over $14,600.
Frank has an auto policy with a coverage limit of $50,000 and a deductible of $500. He gets into an accident and the damages to his car total $9,200. Fortunately, he has collision coverage. How much will Frank need to pay out-of-pocket?
The deductible so only $500
You were tired driving home from a long day of school and work and your eyes closed for just a second. When you wake up you realize your car crashed into a light pole. The pole will need fixed. The front of your car is pretty smashed and you are pretty sure you broke your arm, what coverage(s) do you need?
Liability-you're responsible for paying to fix the pole
collision-for your car damage
medical-get the arm looked at