Consumers & Savers

Budget

A summary of income & expenditures over a period of time.

Interest rates, market confidence, tax laws

What 3 factors influence how much people save?

Balanced budget, budget deficit, budget surplus

What 3 forms can a budget take?

Rate of return, degree of risk, safety, liquidity

What 4 factors determine where people put their savings?

Value of things you own, interest payments from investments

What are the 2 sources of income from wealth?

Set financial goals, estimate your income, plan for expenditures

What are the 3 steps to preparing a budget?

Immediate possession, flexibility, safety, emergency funds, character reference

5 advantages of credit?

Liquidity

A measurement of how easily one can convert their savings into cash

consumer

A person who buys goods or services for personal use.

Pension fund

A retirement account obtained through one's employer. Not FDIC insured, moderate rate of return, not liquid.

purchase items they dont have the savings to afford

Consumer credit allows consumers to...

Budget deficit

Expenditures exceed income

Statement savings account

FDIC insured, very liquid, but low interest rate.

High encourages saving, low discourages saving

How do interest rates affect how much people save?

Lower taxes on interest payments encourage saving

How do tax laws affect how much people save?

Economy strong, more spending; economy weak, less spending

How does market confidence affect how much people save?

$250,000

How much insurance is provided to savers by the FDIC?

Balanced budget

Income & expenditures are =

Budget surplus

Income exceeds expenditures

Wage

Income paid by hour

Rate of return

Measurement of the amount of interest one receives from an investment.

Corporate Stock

Not FDIC insured, high risk, potential high rate of return, moderate liquidity.

U.S. Savings Bond

Obtainable through the U.S. government. Purchased at ½ the face value & will mature to full faced value over a specified period of time. FDIC insured, moderate liquidity, moderate rate of return.

Corporate savings bond

Obtainable through various corporations that offer them at various times in order to generate revenue. FDIC insured, less liquid than a U.S. savings bond, higher rate of return than a U.S. savings bond, moderate risk.

Certificate of deposit

Requires one to leave their money in an account for a specified period of time. FDIC insured, not liquid, high rate of return.

Mutual fund

Special investment companies in which people pool their savings to make a variety of investments such as owning stock in various companies. These diversify your stock holdings to reduce risk. Not FDIC insured, potentially high rate of return, moderate liquidity.

Principle

The amount borrowed. Must be repaid

Salary

The amount of income to be paid over the course of a year on a weekly, bi-weekly, or monthly basis.

4%

The average American household saves ____% of their income.

Principle, finance charge

What 2 strings are attached to consumer credit?

Degree of risk

The higher the interest provided by an investment, the greater the....

Interest rate

The more liquid an investment is, the lower the...

Finance charge

The total amount you pay to use credit.

Wage, salary

What are the two sources of income from work?

Federal Deposit Insurance Corporation

What does the FDIC stand for?

So that it will be protected from loss

Why is safety an important factor when deciding where to put savings?

Saving

You increase wealth through...