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...
