Financial Literacry 101🏦
A three-digit number that represents your creditworthiness.
What is a Credit Score?
A credit score is a number that represents your creditworthiness, based on your credit history. It’s important because it affects your ability to get loans, credit cards, and the interest rates you'll pay.
This type of fund should cover 3-6 months of expenses for unexpected emergencies.
What is an emergency fund?
An emergency fund is money set aside to cover unexpected expenses, like medical bills or car repairs. It’s important because it provides financial security during emergencies, helping you avoid debt when unplanned costs arise.
This is the term for the amount of money you owe on your credit card that carries over to the next month
What is balance?
A balance on a credit card is the amount of money you owe for purchases made on the card. It’s important because carrying a balance can lead to interest charges, and high balances can negatively affect your credit score.
This bank account is used to manage everyday spending, like paying bills, shopping, or withdrawing cash
What is a checking account?
A checking account is a bank account that allows you to deposit, withdraw, and manage money for daily expenses. It’s important because it provides a secure and convenient way to pay bills, make purchases, and access cash when needed.
This helps you plan and track your income and expenses, ensuring you can manage your money effectively and save for future goals.
What is a budget?
A budget is a plan that helps you track your income and expenses to manage your money. It’s important because it ensures you live within your means, save for future goals, and avoid overspending.
This is when you use discounts or deals to save money while shopping
What is couponing?
Couponing is the practice of using discounts and special offers to save money on purchases. It’s important in college because it helps students stretch their budgets, making essentials like food and school supplies more affordable.
This is a common consequence of missing a credit card payment
What is a late fee?
A late fee on a credit card is a charge applied when you fail to make a payment by the due date. It’s important to avoid these fees because they add to your debt and can negatively impact your credit score.
This is a bank account where you can keep money and earn a small amount of interest over time.
What is a savings account?
A savings account is a bank account that allows you to store money while earning interest over time. It’s important because it helps you build financial security, save for future goals, and prepare for emergencies.
This term describes the money you earn before taxes and deductions.
What is Gross Income?
Gross income is the total amount of money you earn before taxes and deductions. It’s important because it helps determine your eligibility for loans, credit, and is used to calculate your tax liability.
The earlier you start investing in your retirement plan, the more time your money has to grow. Ideally, you should begin contributing through what ages.
What are the ages 20-30?
A retirement plan is a savings account designed to provide income after you stop working. Starting to contribute in your 20s or 30s is important because it allows your money to grow over time through compound interest, helping secure your financial future.
The type of loan that helps students pay for college but must be repaid after graduation
What is a student loan?
A student loan is money borrowed to pay for college expenses that must be repaid with interest. They are important because they help students afford education, but managing them wisely is crucial to avoid long-term debt.
This is when you put your money into things like stocks, bonds, or real estate to help it grow over time.
What is investing?
Investing is the process of putting money into assets like stocks, bonds, or real estate with the goal of growing wealth over time. It’s important because it helps build financial security, generate passive income, and prepare for long-term goals like retirement.
The total amount of money owed on credit cards, loans, and other financial obligations.
What is Debt?
Debt is money that is owed to others, typically through loans or credit. It’s important because managing debt well can impact your financial stability, credit score, and ability to make future purchases.
A practical way for college students to save money on textbooks
What is renting/buying used books?
Renting textbooks in college means borrowing books for a semester at a lower cost instead of buying them. It’s important because it helps students save money and avoid paying full price for books they may only use once.
This is the maximum amount of money you can borrow on a credit card or line of credit
What is a credit limit?
A credit limit is the maximum amount a lender allows you to borrow on a credit card. It’s important because staying below your limit helps maintain a good credit score and prevents overspending.
This is when you share ownership in a company, which means you own a small part of that business
What is a stock?
A stock is a share of ownership in a company that investors can buy and sell. It’s important because owning stocks can help grow wealth over time as companies succeed and their stock values increase.
The cost of borrowing money, usually shown as a percentage
What is interest?
An interest percentage is the rate at which interest is charged on borrowed money or earned on savings, expressed as a percentage. It’s important because it determines how much you’ll pay or earn over time, impacting loans, credit cards, and savings accounts.
This is when you pay the full amount owed on your credit card each month
What is "paying off the balance"?
Paying off the balance on a credit card means clearing the total amount owed by the due date. It’s important because it prevents interest charges from accumulating and helps maintain a good credit score.
These are the three major credit bureaus that track credit history in the U.S
What is Experian, Equifax, TransUnion?
Experian, Equifax, and TransUnion are the top three credit bureaus because they collect and maintain credit history data for lenders to assess borrowers' financial responsibility. They are important because they determine credit scores, which affect loan approvals, interest rates, and financial opportunities.
This is a retirement savings account offered by many employers, often with company matching.
What is a 401(k)?
A 401(k) is a retirement savings plan offered by employers that allows employees to save and invest a portion of their paycheck before taxes. It’s important because it helps ensure financial stability during retirement by providing a dedicated savings plan with potential growth.