Budgeting and Spending
A plan for how to spend and save your money.
Budget
____ = total earned before taxes; _____ = take-home pay after deductions.
Gross Income and Net Pay/Income
What’s one reason people keep their money in a bank instead of at home?
Banks keep money safe, insured (FDIC), and may even pay interest.
The money you set aside instead of spending immediately.
Savings
The amount of money you borrow and agree to pay back with interest.
What's the difference between a need and a want?
A need is something necessary for survival; a want is something nice to have.
Name two types of deductions you might see on a paycheck.
Social Security, Medicare, federal/state taxes, health insurance.
What’s the difference between a bank and a credit union?
Banks are for-profit; credit unions are member-owned nonprofits.
The cost of borrowing money or the reward for saving it.
Interest
This is the amount of money you borrow and agree to pay back with interest.
Loan
Expense amounts that stay the same month to month, and expense amounts that are subject to change month to month.
Fixed Expenses and Variable Expenses
Money taken out of your paycheck for taxes or benefits.
Payroll Deductions
What are two common services banks often provide besides checking and savings?
Loans and credit cards
_______ = only on the principal; ________ = on principal + previous interest.
Simple and Compound Interest
The original amount of money borrowed before interest.
Principal
The value of what you give up when you make a choice.
Opportunity Cost
Name a career/role where someone would earn commission as an income type.
Salesperson, answers might vary.
Your purchase goes through, but your balance says otherwise; resulting in a penalty/charge.
Overdraft Fee
Standardized percentage that shows the true yearly cost of borrowing, including interest and fees (hint: acronym)
APR (Annual Percentage Rate)
Why do lenders charge interest on loans?
It’s their profit for letting you borrow money (the cost of credit).
The 'pay yourself first' principle encourages you to do this before spending on anything else.
Set aside money for savings
FICA taxes on your paycheck fund these two government programs.
Social Security and Medicare
What does FDIC insurance protect you from?
Losing your money if the bank fails (insured up to $250,000).
The 'Rule of 72' helps you estimate....
How long it will take for your principal investment to double.
The process of spreading payments over time — each payment covers interest and part of the principal.
Loan Amortization