Personal Finance - Unit 1
Net Pay
Amount of income left after taxes and deductions have been taken out.
Money left over after paying for housing, food, and other necessities
Discretionary income equals
What you give up by making a choice
Opportunity cost refers to
Net worth
The amount you would have left if all assets were sold and all debts were paid in full is called your
Within the next 6 months, buy a car for less than $15,000
Which of the following short-term goals is stated most clearly using the SMART approach?
Poor credit rating
Which of the following would increase the interest rate for a loan?
tax audit
a detailed examination of your tax return by IRS
CPI (Consumer Price Index)
a measure of inflation
wealth
federal of state a tax on the value of property after a death of an inheritance
financial statement
measure and guide your financial position and progress
future value
mount that will be available at a later date
net worth statement of statement of financial position
other names for balance sheet
office audits
take place at an IRS audit
earnings
tax on income and social security
cashflow
the actual inflow and outflow of cash during a given period
time value of money
the increase in an amount of money as a result of interest earned
compounding interest
the interest earned on the interest
Financial Planning
the process of managing your money to achieve economic stability
economics
the study of how wealth is created and distributed
average tax rates
total tax due divided by taxable income
correspondence, office, feild
types of audits
purchase, property, wealth (federal/state), earnings
types of taxes
investment divided by amount per year always a percentc
what is the rate of return
Items owned, amounts owed, and your net worth.
A personal balance sheet reports
Pay his or her fair share of taxes while taking advantage of appropriate tax benefits
A worker's primary goal should be to
possibility of receiving an employer match on your contributions
An advantage of investing in a 401(k) plan is the
Home rental payment.
An example of a fixed expense is
5 %
If a $10,000 investment earns interest of $500 in one year, what is its rate of return?
9 years
If inflation is expected to be 8 percent, how long will it take for prices to double?
10%, 12%, 22%, 24%, 32%, 35%, and 37%
In 2020, the U.S. federal tax tables included tax rates of
Long-term
The goal of investing $50 per month for the next 12 years for your nephew's college fund is a(n) ________ goal.
His 20-year-old son who is working full-time and living in an apartment
When Paul completes his taxes, he can include all of the following as exemptions except
Actual spending exceeds planned spending
A budget deficit would result when a person's or family's
$40,000
A family with $100,000 in assets and $60,000 of liabilities would have a net worth of
balance sheet
A financial statement that reports assets, liabilities, and owner's equity on a specific date. what they owe and what they own
Financial plan.
A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities is a(n
investment
Common stock and bond brokerage statements are an example of a(n) ________ record
field audit
IRS visit to home, business, or accountant's office.
more
If I can invest a dollar today and earn interest on it, then it should be worth ________ in the future
tax exempt investments
Investments that are tax-free
assests
Items that you own that have a monetary value are referred to as
Poor planning and weak money management habits
Many Americans have money problems because of
amount in savings x annual interest rate x time period(years) = interest
equation for calculating intrest
Electric bill
An example of a variable expense is a(n)
Tax-deffered investment
An investment that is not taxed until you withdraw the money and begin to use it.
w-2
At the end of the year, Xavier received a form from his employer that reported annual earnings and the amounts deducted for taxes. That form is called a
the money left over after paying taxes
Disposable income equals
A Roth IRA
Evan is not concerned about immediate tax benefits but instead wants his investment to grow in value on a tax-free basis. Which of these would be the best for him to invest in today?
Preparing personal financial statements
Money management refers to
Married, filing a joint return
Nancy is married to Jerry and needs to complete her tax form. They both earn about the same amount of money each year. What filing status would be best for them?
$40 surplus
Rebecca Wilson budgeted $1,200 for housing and utilities in July. She actually spent $1,160. What is her budget variance?
specific, measurable, action - oriented, realistic, time bases
SMART goals
social security tax
Taxes on earnings that fund old age, survivor, and disability insurance benefits are called
budget
The document that would be most useful to plan spending and saving to achieve financial goals is the
Assets - Liabilities = Net worth
The equation to calculate net worth is
Achieve personal economic satisfaction
The major function of personal financial planning is to.
7 years
The number of personal financial records a household has to organize may seem overwhelming. How long should you keep copies of your tax returns?
inflation
The rising or falling of prices that causes changes in buying power is referred to as ________ risk
adult life cycle
The stages in the family situation and financial needs of an adult is called the
the rule of 72
Used to estimate how fast prices will double using a given annual inflation rate
Federal Reserve System
attempts to maintain an adequate money supply to encourage consumer spending, business, growth, and job creation.
correspondence
audit on minor questions
total cash - cash outflow = cash surplus
equation for cash flow
72/interest % = pay period doubles
equation for rule of 72
property
real estate, personal property tax
purchase
sales and excise tax
budget
the basis for effective money management