Personal Finance Chapter 1

Personal finance is __% behavior and __& head knowledge.

80&20

Summarize the attitude of teen money attitude

9/10 teens were affected by the recession and now more of them appreciate their families and their hard work. They have stopped asking for things and know it's important to have an emergency fund.

how do you develop a financial plan

you need to know your budget and personality have discipline with your normal spendings

Explain why understanding your money personality is important when it comes to developing a money plan that's right for you.

you need to know your own strengths and weaknesses. don't let your money manage you.

Many Americans are buried in debt

the average American family is in debt of about $7,000

What are the 7 key components of financial planning?

1. Assess your financial situation 2. Set money goals 3. Detailed plan 4. Execute your plan 5. Know your money personality 6. Monitor and reassess financial plan 7. Know money myths from money truths

Why should students learn about personal finance?

It can eliminate financial mistakes in the future.

Consumer

A person or organization that buys/uses goods or services

Explain why income alone cannot determine someone's wealth.

Even if you get a large paycheck if you spend more than you make you will go into debt.

Explain why your money personality is important to develop your money plan

Understanding your personal strengths and weaknesses when it comes to money will help you manage your spending and saving behavior.

Personal finance success is a result of

managing your money wisely and creating little to no debt

When is true financial security reached?

when your money starts earning money for you.

What does having debt keep you from doing?

Building wealth.

Define the history of credit and consumerism

At first, it was rare for people to buy things using credit. It was never legal for lenders to charge interest rates high enough to make a profit. Having debt now is normal. After the great depression, the credit card was born.

Explain how marketing can affect your decisions when it comes to spending money.

Because they say you should buy now and pay later. Push you to buy things. catchy commercials convince you to buy things you cannot afford

What are 3 facts that lead to being money smart?

Comfortable with basic math, learn money language, manage you behavior with money.

During the Great Depression, the New Deal policies convinced commercial banks of what?

Consumer credit could be profitable

Describe some of the mistakes Americans often make when it comes to money.

Getting loans. Buying things they can't afford. Going into debt. use debt as a financial fund no emergency fund no retirement plan

List 3 consequences of spending more than you make.

Missed opportunity Debt cycle Unhappy/stress

What are two benefits of understanding your own money personality?

Plan that works for you Opportunity to grow and learn

Of the four money personalities, which one matches your view of money and why?

Role models, I don't want to spend money like my parents

What is not a reason credit is marketed so heavily to consumers in the US?

The use of credit is not socially accepted in the US

How are Americans being outsmarted by banks and other lenders?

We are told debt is normal and it is accepted in our culture. we are taught we can buy happiness. we are bombarded with marketing ads pushing us to buy things.

loan

a debt evidenced by a note which specifies the principal amount, interest rate and date of repayment

economy

a system by which goods and services are produced and distributed

personal finance

all of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc.

Debt

an obligation of repayment owed by one party to a second party

Learning the language of money is not that important because you will be able to depend on financial planners to manage your money.

false

interest

fee paid by the borrower to the lender for the use of borrowed money.

Credit

granting of a loan and the creation of debt. any form of payment.

financial literacy

knowledge and skill set necessary to be an informed consumer and manage finances effectively.