Saving & Investing
What’s the main difference between saving and investing?
Saving = keeping money safe for short-term use Investing = using money to grow wealth long-term
What is insurance?
A contract that transfers financial risk to an insurance company.
What does liability coverage pay for?
Damage or injury you cause to others.
What are direct costs?
Tuition, fees, books, supplies paid to the school.
What does financial aid mean?
Money that helps pay for education.
What is liquidity?
How easily you can access your money.
What is a premium?
The amount you pay monthly for your insurance policy.
What does collision coverage pay for?
Repairs to your car from an accident.
What are indirect costs?
Housing, food, transportation, personal expenses.
What does fixed cost mean?
An expense that stays the same (like tuition).
What does ROI stand for?
Return on Investment.
What is a deductible?
The amount you pay out-of-pocket before insurance covers costs.
What does comprehensive coverage pay for?
Theft, vandalism, or natural disasters (non-accident events).
What are grants and do you pay them back?
Free money based on financial need — no repayment.
What does variable cost mean?
An expense that changes (like gas or entertainment).
If you invest $100 and make $25 profit, what is your ROI?
25%
What does a claim mean?
Asking the insurance company to pay for a covered loss.
Who needs life insurance the most?
Parents or anyone with dependents.
What does the TEACH Grant require?
You must teach in a low-income school in a high-need subject.
What is a 401(k)?
Employer-sponsored retirement plan where you can save pre-tax income.
Name one low-risk investment and one high-risk investment.
Low-risk: savings account or CD; High-risk: stocks.
Name two reasons why people buy insurance.
To protect from financial loss; to reduce risk or cover emergencies.
What’s the difference between term life and whole life insurance?
Term = covers a set time;
Whole = covers your whole life and builds cash value.
What’s one key difference between federal and private loans?
Federal = lower interest & more repayment options; Private = higher interest, credit check required.
If you earn $50,000 and contribute $5,000 to a Traditional IRA, how much is taxable?
$45,000