Personal Finance Quizlet
deceptive or misleading techniques
"Bait and Switch"-The advertisement entices consumers into the store with bargains that are too good to be true. Once consumers are in the store, they are told the item is unavailable and are shown a similar, but more expensive, item. Often high-pressure sales tactics are used. This is illegal in most states. Exploitation of fears and misgivings-The advertisement plays on consumer fears. Out-of-context quotations-Comments by a noted person or passages from a story are taken out of context to imply an endorsement of a product or service.
monthly payment
(rP)/(1-(1+r)^-n)
a bank is...
A bank is a financial institution or business that has to follow federal and state laws and regulations. Banks provide many financial services including loans, cashing paychecks, money orders, checking accounts, savings accounts, and CDs. They are insured by the FDIC (Federal Deposit Insurance Corporation).
process of buying or selling stock
A company or individual sells shares of stock. An individual puts in an order to buy stock with a broker. The trade is executed on the exchange floor or electronically. The individual waits and watches the stock. The individual puts in an order to sell stock. The sale is executed either electronically or on the exchange floor. Money is sent to seller.
a credit union is...
A credit union is a nonprofit financial institution formed by a large corporation or organization for its employees or members. It's necessary to become a member of the credit union to keep your money there. Members also need to meet certain requirements, such as be an employee in a certain corporation or be a member of a certain organization.
a savings and loans is...
A savings and loan is a financial institution that specializes in home loans, but offers other types of loans and savings deposits, as well. It is also known as a thrift.
upfront costs
A security deposit, or money paid upfront to a property manager to secure an apartment, is usually required. It is held in a bank while renting the apartment. Paying a deposit lets the property manager know that a person is serious about renting. It's usually given back after a person moves out, but if the rent is unpaid or there is damage to the apartment, the property manager will keep part or all of the deposit. Payment of the first month's rent in advance is often required. Fees, including application fees and pet deposits, usually apply. Costs for connecting utilities such as electricity, telephone, gas, cable, and water can add up. Some utilities charge a connection fee, which is money charged for starting up the utility in a person's name. The company may have to send out a technician to start services. Some utilities also require a security deposit. Additional fees can include a non-refundable application fee or a non-refundable move-in fee that covers the cost of preparing the apartment. Moving fees may apply if a moving company is hired.
services and tools available at financial institutions
ATMs; (withdraw, deposit, transfer, 24 hr) transfers; direct deposits; (directly from employer) money exchanges; overdraft protections; online banking; money orders; debit cards; loans; automatic bill payments; traveler's checks. knowing these can save you time and money
purpose of a check register
An important part of maintaining your account is tracking all of your transactions in a check register, where you write down each of your deposits, adding the amount, and each of your withdrawals, subtracting the amount. A check register is the booklet you keep with your checkbook.
common fees from credit card companies
Annual fee: Some companies charge annual fees of $20, $50, or more for just carrying their credit cards. Balance transfer fee: If you transfer your balance to another credit card account, you might be charged this fee. Cash advance fee: When you get cash using your credit card at an ATM or with a bank teller, it is called a cash advance. You are usually charged a transaction fee for this. In addition, a cash advance is also charged higher interest rates than regular purchases, and the interest could begin accruing immediately. Late fee: If your payment is received after the due date, a late fee will be charged. Over-the-limit fee: If your balance increases to an amount that is more than your credit limit, an over-the-limit fee is applied.
when completing a fafsa,
Apply early because they need to be received before the deadline. Complete your tax return before you complete the FAFSA because tax information is required. Complete the FAFSA online to speed up the process.
when selecting a savings account, consider...
Are there penalties and fees? You could pay a penalty if your balance falls below a certain amount, or you may pay fees to obtain a money order. Read the fine print before you open an account. Is there a minimum balance that must be maintained? What is the interest rate? What is the interest threshold? Remember, this is the balance you need before the bank starts paying interest. What are the variable interest rates? These are the different interest rates paid for different size balances. A higher savings account balance may earn a higher interest rate. What is the annual percentage yield (APY)? This is the amount of interest you'll earn in one year from a savings account. The APY includes the effect of compounding. The higher the APY, the more your money will grow.
smart shoppers follow these tips
Avoid high-pressure sales techniques and don't take immediate action. Think before you buy. Offers that sound too good to be true usually are. Don't give out your credit card number for any purpose other than to make a purchase. Don't believe statements that a product or service is free, followed by a request that you pay for something. Request written information about the company and product. Don't buy anything on terms you don't fully understand. Find out about refunds, returns, and cancellation policies. Don't believe testimonials you can't verify. Don't provide any personal financial information.
how to spend wisely
Avoid impulse purchases. Look for bargains. Buy high-quality items. Use credit cards infrequently. Think about what is most important. Track your spending.
five categories of savings accounts
Basic Bank Savings Accounts offer the lowest interest rates, usually about 2 percent. They have few restrictions on access to your money and usually don't require minimum balances. High Yield Savings Accounts are like basic accounts, but they have more restrictions on how often withdrawals can be made. Typically, they require a minimum balance, but may offer 3 or 4 percent interest. Money Market Accounts are like high-yield accounts. They offer a higher rate of interest, but you must start with a large deposit. Also, there are restrictions on how often you can withdraw money. Online Savings Accounts are a lot like basic bank accounts, but they offer higher interest rates because they operate online and don't have the overhead that standard banks have. Credit Union Savings Accounts tend to offer higher interest rates than basic bank savings accounts.
benefits of buying
Buying a house is an investment. The value may increase over time and the equity in your home may increase. Once the mortgage is paid in full, you own the home. You can improve the home by painting, planting a tree, or building a deck. Home ownership may reduce the amount of income tax you pay. You can take out a home equity loan.
factors in being approved for a loan
Capacity-This is the borrower's ability to make payments based on amount of income and other bills. Capital-This is your net worth, the value of the cash you have, investments you have, and items you own. Character-This is how responsible you've been in the past with credit; loan officers use information from your credit report to determine your character. Collateral-This is a piece of property that a person promises to give the lender if a loan is not paid.
common types of loans
Car loan-A car loan or auto loan is used to purchase a new or used car. Student loan-A student loan helps pay for educational expenses, such as college tuition, books, or housing. Home equity loan-The equity in someone's house is the value that is invested in the house. In other words, equity is the value of the home minus the amount owed to a financial institution. You can borrow from this equity. When you take a home equity loan, you get a sum of money and you pay it back in monthly payments over a certain amount of time, typically ten to fifteen years, or when you sell the house if there is a loan balance. Home equity loans can be used for a wide variety of purposes. Many people take home equity loans to make home improvements. Small-business loans-If you wanted to start a small business, you would have many start-up expenses. Therefore, you may want to apply for a small-business loan to pay these expenses. Personal loans-A personal loan is borrowing a sum of money from a financial institution for personal use. Personal loans are unsecured loans, so you would not have to offer collateral, but you would need a high credit score to secure such a loan. The money may be used for almost anything, including a vacation, a car, or medical expenses. Some people even get a loan to pay off other debt such as credit cards. Individuals who incur more debt to pay off other debt need to be very cautious. They should analyze the total cost of the loan because the percentage rates and the loan period may actually increase the total cost.
parts of a check register
Check number. If you wrote a check, enter the check number here. If the transaction was something other than a check, you can abbreviate the type of transaction. For example, if you used an ATM, write ATM. And if you made a deposit, write dep. Date. Write the date of the transaction in this column. Description. Write a description of the transaction. For example, if it's a check, write the name of the payee and the item that was purchased. You can write 'cash' or 'spending money' when you withdraw cash. Transaction amount. Write the amount of the withdrawal. The amount entered in this column will be subtracted from the balance. Deposit amount. Write the amount of the deposit. Amounts entered in this column will be added to the balance. Balance. Write your balance, or the amount you have in your checking account, in this column. You'll need to add the deposit amount and subtract the withdrawal amount for each transaction. Current balance. If you've been careful to record all transactions and your figuring is correct, the last figure in this column is the amount you have in your checking account.
consumer rights list
Consumers have the right to be safe. This right protects consumers against injury that may be caused by a product. The Consumer Product Safety Commission (CSPC) oversees thousands of commercial products and establishes standards, requires product testing, and requires companies to have warning labels. In addition, the CPSC requires immediate notification when defective products have already been sold and need to be recalled. Consumers have the right to receive compensation. This right entitles you to receive a fair compensation to make up for unsatisfactory goods or services. Consumers have the right to choose freely. This right gives you the choice of products. In other words, consumers should have a variety of options provided by different companies. When there are options, there is also competition. And competition keeps prices lower. The federal government has laws in place to insure that consumers have choices. Consumers have the right to be heard. This right gives you the ability to voice complaints and concerns against products. If you have a difficulty with a business about a product or service, there are places to take your complaints. If the business is in violation of the law, you may turn to the state and federal attorney general's office. In addition, you may contact the Better Business Bureau to file a complaint. The Better Business Bureau is an organization whose purpose is to receive and investigate customer complaints of dishonest business practices. They also publish this information so that you can avoid businesses with bad records. Consumers have the right to be informed. This right states that businesses need to provide consumers with appropriate information that will enable them to make informed product choices. This information must be complete and truthful. There are laws in place to protect against printing incorrect information when labeling, advertising, packaging, or providing financial information. Consumers have the right to education. This right gives consumers access to information that helps consumers make good purchasing decisions. Consumers have the right to service. This right gives you the chance to refuse any service offered. It also states that when receiving a service, you should be treated with courtesy and respect, and that the business should respond to your needs and problems.
how to be compensated
Contact the seller, remain calm, and state the problem and exactly what you want done about the problem. Make sure you keep receipts and write down information, such as names of employees that you speak with and any facts that they state. The problem will probably be taken care of at this step. If the problem is not resolved, ask to speak to a manager. If the problem is still not resolved, send a letter or e-mail to the company's headquarters. If the problem still isn't resolved, contact your local consumer protection agency or Better Business Bureau. If you still do not have the problem resolved and the purchase was large, you may need to file a claim with small claims court or hire an attorney.
benefits of credit cards
Credit cards are a convenient way to borrow money. They allow you to make purchases at a store, over the phone, or on the internet. Carrying a credit card with you means that you don't have to carry cash or your checkbook. Credit cards also allow you to reserve rental cars and hotel room and may be required when paying for them. And, with a credit card, you can cover unexpected expenses, such as car repairs.
four types of credit
Credit cards are issued by individual stores, banks, or credit card companies. Service credit is a promise to pay for services, such as telephone, gas, electricity, and water. Since you don't pay for the water before you use it, it's considered credit. Loans allow borrowers to obtain money with the promise to pay it back. Loans can be for small or large amounts, and the amount may be loaned to you for a few days or several years. The money can be repaid at one time or in regular payments. Installment credit allows the borrower to take a product home with a promise to pay later. The product may be a large appliance or furniture. You usually sign a contract, make a down payment, and make regular payments, called installments.
examples of fees under finance charges
Credit report fees-This is the fee paid to cover the cost of obtaining a credit report. Appraisal fee-This is the fee paid for an appraiser who provides a value for the item being purchased, such as a house. Loan application fee-This is the fee paid to process the paperwork to see if an individual is accepted for the loan. Sometimes this includes the credit report fee and appraisal fee. Lock-in fee-This is a fee to hold a low interest rate while the lender reviews the application. Loan origination fees-These are fees that cover the processing of a mortgage.
people at the bank who can help you
Customer service representative-This representative helps you open an account, explains services, answers general questions, provides printed materials, and refers you to other employees when you have specific questions. Teller-A teller cashes or deposits your checks, answers general questions, and refers you to other employees when you have specific questions. Loan officer-This officer answers questions about loans, provides printed information about loans, helps you fill out a loan application, and processes your loan application. Branch manager-The manager supervises employees at the bank, supervises bank operations, and helps fix problems that other employees can't fix. websites and printed material
parts of a check
Date line. Write today's date here. Payee. Write the name of the person or the company you are paying. Amount of check in numbers. Enter the amount of the check in numbers. Amount of check in words. Enter the amount of the check in words. Start writing at the far left side of the line. After the dollar amount, write "and," then write the amount of cents above the number 100. Draw a line from the end of the 100 to the end of the line. Name. Your name and address is printed here. Signature. Sign your check. Memo. This line is optional. You may use this space to note why you wrote the check. Identification numbers. These numbers are used to identify the bank, your account number, and the check number. They are printed in a special magnetic ink that machines can read. Check number. You use this number to identify the check when you record it in your checkbook.
steps when choosing a mutual fund
Decide how much tolerance you have for risk. Some funds are riskier than others. Review ratings of mutual funds. Magazines and web sites analyze the various funds. Review the past performance. Did the mutual fund increase in value over the past year, five years, or even ten years? Look at the fund's expenses. As an investor, you cover the expenses, so you want to look for funds that keep their expenses low.
questions to think about when considering buying a home
Do you have a steady income and stable job? Have you been employed on a regular basis for two to three years? Do you have a good credit report and credit score? If you buy a home, will you be able to pay your bills and keep your debt-to-income ratio less than 30 percent? Do you have the ability to make the mortgage payment every month, plus handle additional costs for taxes, insurance, maintenance, and repairs? Do you have enough money saved for a down payment and closing costs? Do you have enough money saved to cover two to three months of mortgage payments in case you lose your job?
are you ready to rent an apartment
Do you have enough money and income to pay for all the costs? Is the place you can afford safe? Do you have a good credit score? Is your job stable? Do you have enough money saved up to cover two to three months rent in case you lose your job? Are you ready to live on your own and take care of your daily needs, such as cooking, waking up on time, and shopping for necessary items?
when looking for a place of your own, ask yourself
Do you have enough money and income to pay for all the costs? Is the place you can afford safe? Do you have a good credit score? Property managers will look at this to determine if you'll make a trustworthy tenant. Is your job stable? Do you have enough money saved up to cover two to three months rent in case you lose your job? Are you ready to live on your own and take care of daily needs such as cooking, waking up on time, and shopping for necessary items?
three main credit bureaus
Equifax, Experian, and TransUnion, obtain a credit report once a year
FICA
Federal Insurance Contributions Act, more commonly known as Social Security; a portion of wages is withheld and sent to the government trust fund and set aside for retirement benefits.
the three tax return forms are...
Form 1040EZ. This is the simplest form. It is for people under age 65 with no dependents and no itemized deductions who make no more than $100,000. Form 1040A. Only a little more difficult to complete than the 1040EZ, you use this if you do have dependents. You may use this form if you make less than 100,000 and you don't itemize deductions. Form 1040. If you do not qualify to use the 1040EZ or 1040A, use this form.
consumer responsibilities
Gather information about products and services before making a purchase in order to be aware of price, quality, and the product specifications. Read instructions on products and use them only as intended. Take action. Report faulty products, fraudulent activity, and any other violation of consumer rights. Stay informed about products that you buy in order to be aware of product recalls. Insist on compensation if you are not satisfied with your purchase. Consider the impact of your purchases on others, including choosing products that don't harm the environment.
after comparing and selecting savings account options...
Gather the required information: date of birth, Social Security number, home address, and telephone number. Choose a director for the account. If you are under the age of 18, you'll need a director on the account, usually a parent. Go to the bank to sign the necessary bank forms. The director of the account must sign the forms, as well. Fill out a deposit slip and deposit at least the minimum amount of money.
how to prevent cash loss
Have you ever had money fall out of your pocket? Most people have lost money at some time or another. Keep your money in a safe place, don't carry much cash on you, and use traveler's checks when you travel.
types of insurance
Home or homeowner's insurance provides financial protection against disasters to your home. A standard policy insures the home itself and provides property coverage for the things you keep in it. Renter's insurance provides property coverage for damages that occur to items inside a rental property. Disability insurance replaces a percentage of your gross income if an injury or illness prevents you from earning an income. Car insurance provides protection in case of an accident or theft. It covers hospitalization costs that happen as a result of a car accident. Some policies include liability coverage or coverage for the costs incurred by others involved in a car accident that's your fault. Health insurance covers costs associated with health, such doctor bills, hospital stays, vaccinations, and prescriptions from a pharmacy. Health insurance varies greatly in what it covers. Sometimes a health insurance plan will require you to pay a co-payment. This is a fee that you pay each time you visit the doctor or buy a prescription. Dental insurance covers at least part of the costs incurred at a dental office, such as cleanings, exams, fillings, and x-rays. Vision insurance covers costs incurred at an optometrist's office. Life insurance pays a certain sum of money in the case of death. The payment is made to the beneficiary. Jewelry insurance covers the cost to replace jewelry in the case of loss or theft. Malpractice insurance protects doctors, dentists, and other professionals from financial loss caused by law suits. Travel insurance covers costs paid for a vacation in case there's need to cancel.
appeals and techniques used in advertising
Humor is used to catch audience attention. Famous spokespeople are shown using a particular product or service. Experts, such as dentists or doctors, are show recommending certain products. Ordinary people are shown using everyday products, such as laundry detergent, in hopes that consumers will identify with them. Status is often suggested by associating product use with someone who is successful and enjoys the "finer things in life." Physical attraction is suggested by associating the use of a product with increased physical attraction or appeal. Entertainment is implied by showing others using the product while having fun. Intelligence is suggested by associating products with smart people who can't be fooled by gimmicks. Independence is suggested by associating products with people who can think and act for themselves. Guarantees, such as "lifetime guarantee" and "satisfaction guaranteed, or your money back," imply security. Scarcity is implied when the seller creates a false sense of urgency by claiming that supply or time is limited. Perceptual contrast is employed when the seller presents an undesirable option first to make the second option look far superior. Scientific or numerical claims, some of which cannot be proven, such as "Nine-out-of-ten doctors say ...," reassure the purchaser. Popular music is used so that the consumer might attach the product to something popular. Bright colors catch the attention of a viewer. Sound effects catch the attention of a viewer. Words like "new," "amazing," or "free" catch the consumer's attention.
steps you should follow when reading a warranty to understand what to expect if you need a repair
Identify the time frame or term the warranty applies to. You may find the warranty is good for a certain number of years, until a certain date, or in the case of a car warranty, for a certain amount of mileage. Locate and read the sections in the documents that tell you exactly what is covered. Read the section of the document that lists exclusions or what is not covered. In some warranties, it is easier to determine what is covered by understanding what is not covered. Read the section about limitations carefully. This part of the warranty will state certain situations when the product will not be fixed. For example, a product may not be fixed if it was dropped.
tips to help you save
If you receive cash as a gift, save at least part of it. Pay your bills on time in order to avoid late fees and finance charges. Use direct deposit or set up your account to transfer money automatically and directly into savings. Save any extra money you receive from your employer as a raise or bonus. When you get a tax refund, save it. Save the change you have in your pocket at the end of the day, and deposit it regularly into a bank account. If your employer offers a retirement plan, join it. If you pay off a loan, continue to make the monthly payments to yourself. Avoid debt.
how to make sure an online banking website is secure
If you visit your bank's web site and log into your account, the URL address changes from "http" to "https." The extra "s" stands for "security," and lets you know that the page is secure. A padlock icon may appear somewhere on the page. Newer Web browsers may also use a green background on the address bar to indicate the connection is secure. You may also find a gold seal somewhere on the site that reads, "VeriSign Secure Site." VeriSign is a leading provider of Internet trust services, and its insignia is confirmation that your bank is certified as a secure domain.
how to use a checkbook register
In the far left column, enter the check number or abbreviation for the type of transaction. In the second column, write the date of the transaction. In the description section, write the name of the payee and a few words that explain the transaction. In the transaction amount column, write the amount of the withdrawal. In the deposit amount column, write the amount of a deposit. In the last column, calculate your balance.
IRS
Internal Revenue Service; a government agency that is responsible for collecting taxes
questions to ask yourself when selecting a bank
Is it insured? Does it offer the services I need? Where are the branches located? What hours is it open? Are ATMs available and convenient? Am I eligible to be a member of the credit union? Will there be any fees? What is the minimum balance? What are the interest rates?
cooling off rule
Let's say that you buy an item in your home or at a location that's not the seller's regular place of business. For example, a door-to-door salesman sells you a set of encyclopedias. You have three days to rethink your purchase and cancel any purchase of $25 or more. The seller must inform you of your cancellation rights at the time of sale.
ways to avoid debt of student loans
Live at home. Attend an inexpensive community college for one or two years, and work part time to save money until you can transfer to a four-year school. Work and earn money as you go to school. Consider the GI Bill; the military offers substantial funding for education in return for military service. Consider the Federal Work-Study program (FWS), which, if a student is awarded work-study as part of their financial aid, they can work part-time to earn funds to pay for college.
differences among mortgages
Loan period or term-There are many different terms, such as fifteen year, twenty year, or thirty year. Interest rates-The interest rates may be high or low, fixed or variable. Some loans start with a fixed rate and then become variable after a certain amount of time, such as two years. Down payment-Some loans require less of a down payment than others.
loan facts
Loans cost money. The money you pay for a loan is called finance charges. Finance charges include interest, service charges, and loan fees. The amount of time it takes to pay off a loan is the loan period, sometimes called a term. Some loans have a fixed interest rate (interest rate that stays the same) and some loans have variable rates (interest rates that may change). If you choose a loan with a variable rate, the interest rate may increase over the length of the loan. Sometimes the rate increases so much that it makes it difficult to make the loan payments. Most people choose a fixed rate because they don't want to take the chance that the rate will increase. Most loans are installment loans. This means they're paid in equal payments over a certain amount of time. Some loans are secured loans and some are unsecured loans. A secured loan is a loan in which the lender requires collateral; if the loan is not paid back as agreed, the individual gives up the collateral to the lender. Unsecured loans are loans in which the lender does not require collateral. These are sometimes called personal or signature loans and may be used for personal expenses, such as education or medical expenses. Sometimes another person may co-sign for a loan. Having a responsible adult co-sign a loan may improve your chance of being approved for the loan. However, when a person co-signs on a loan, the person is signing a legal contract. If the borrower does not repay the loan amount or makes late payments, it can affect the co-signer's credit report.
principles and strategies of saving and investing...
Look at your goals and make sure your plan coincides with your goals. Understand your risk tolerance. Learn as much as you can about the investment. Keep investments simple. Look at past performance. Diversify to minimize risk. Start with low-risk investments and move to riskier investments after you've been successful. Consider how long you plan to keep your money in the investment. Continuously reassess your plan. Keep investment expenses low. Stick with it.
steps to maintaining a checking account
Make deposits and withdrawals. Record deposits, withdrawals, interest, and fees in the checkbook register. Keep track of your balance.
online tools
Mint is a free online tool that allows you to track your spending and warns you when you are spending too much. Mvelopes is a system for tracking spending. BudgetTracker is a free online tool that allows you to track your spending, bills, and transactions. Expensure is a free online tool that helps you manage bills that you share with others.
car loan vs car lease
Monthly car payments are higher. However, at the end of the loan, you own the car vs Payments are lower because you are not purchasing the car. The car dealership still owns it There are no additional costs for damages vs Most leasing companies charge you extra money for any damage found at the end of the lease There are no mileage restrictions vs The lease includes restrictions on the number of miles you drive each year. If you exceed the set mileage, you'll have to pay the dealer an amount listed in your lease Auto insurance usually costs less vs Auto insurance usually costs more
tools and services provided for savings accounts
Online statements allow you to view your balance and transactions online. ATMs allow you to withdraw money. Online savings plans help you set goals and track your progress. Transfers allow you to move money to other accounts. Direct deposit makes it easier to add money to your account. Automatic transfers allow you to regularly move a certain amount of money from your checking account to your savings account.
possible uses of spreadsheets
Organize data you need in order to prepare taxes. Calculate the amount of your mortgage payments or car payments. Create specific budgets for special things like vacations or a wedding. Print reports. Generate graphs. Compare prices. List your assets. Organize account and credit card information. Calculate the cost of your spending habits. Calculate your net pay. Predict how much you'll save in a certain amount of time.
good credit score
Pay bills on time. Review a credit report yearly and dispute any errors. Pay your entire credit card balance. Keep the number of credit cards low - one to three.
options for paying the monthly credit card bill
Pay the bill in full. This is the best option because one pays no interest. Pay the minimum payment. This is the worst option because one pays the most in interest. Pay an amount somewhere between the minimum balance and the total amount due.
what determines a credit score
Payment history-Does the record show many late payments? Or does it show a bankruptcy or an account turned over to a collection agency? Outstanding debt-How much does an individual owe on credit cards and to banks? Credit history-How long has an individual had his oldest account? Application for new credit-How many new accounts has the individual tried to open? How long has it been since the individual tried to open a new account? Types of credit in use-How many credit accounts are already open?
various grants
Pell Grants-Pell grants are awarded to students in their first four years of college. Pell Grants pay only a small part of the cost, and usually students obtain additional financial aid. The amount of money you get depends not only on your financial need, but also on your costs to attend school, and your status as a full-time or part-time student. Federal Supplemental Educational Opportunity Grant (FSEOG)-This program is for students with large financial needs. Through this type of grant, you can receive between $100 and $4,000 per year, depending on when you apply, your financial need, the funding at the school you're attending, and the policies of the financial aid office at your school. Academic Competitiveness Grant-This award is added to a student's Pell Grant award. It will provide up to $750 for the first year of college and up to $1,300 for the second year. Students in their second year must maintain a grade point average of at least 3.0. National Science and Mathematics Access to Retain Talent Grant (SMART)-SMART grants are offered only to full-time students in their third and fourth years of college, and they're only offered to students who are also eligible for the Federal Pell Grant and who are majoring in physical, life, or computer sciences, mathematics, technology, engineering, or a foreign language determined critical to national security.
various loans
Perkins Loans-This loan is for students with large financial needs. It has low interest rates and no fees. You borrow this money through the school, and you can borrow up to $4,000 per year. You are required to start making payments nine months after you graduate or leave school. This amount of time is called the grace period. Stafford Loans-These are loans with a fixed rate for college students. Stafford loans can be used to pay tuition and other eligible school expenses.
disadvantages of buying
Property maintenance and upkeep are your responsibility. There are additional costs, such as homeowner's insurance, real estate taxes, interest on the mortgage, and PMI. You might not be able to renew your rental contract, and then you'll have to find a new place to live. It's not as easy to move. You can lose your home and your investment if you don't make your mortgage payments on time.
benefits of renting
Property maintenance, such as plumbing repairs or heater repairs, is the responsibility of the property manager. Upkeep of the grounds outside your apartment, such as mowing the lawn, is not your responsibility. There are fewer costs associated with renting because you don't have to pay property taxes or homeowner's insurance. You're only obligated to live there for the length of the lease. If you don't like something, you can easily move.
how to use credit responsibly and maintain creditworthiness
Protect your credit card and account numbers to prevent unauthorized use. Quickly report lost or stolen credit cards. Open only a few credit cards. Too many credit cards can make overspending tempting. Only pay for something with a credit card if you can pay the full balance when the balance is due. Look for credit cards that have no annual fees and lower interest rates. Read the terms of the credit carefully and make informed decisions. Don't take cash advances. They are expensive. Pay off your total balance each month. If you cannot pay the total balance, try to pay as much as you can. Don't spend more than your credit limit.
correcting credit problems
Sell something of value to pay your debt. Find credit counseling services. Get help from a finance company. A finance company can help you by paying off your debt. In turn, you make only one payment to the finance company. Be careful! Finance companies sometimes charge high interest rates. Transfer credit card balances to a card or loan with lower interest rates. Ask your credit card company to waive fees or lower your interest rate. Use credit responsibly and be patient. It takes time for your credit score to improve.
avoid debt
Set goals. Use the debt-to-income ratio to determine if you're ready for a big purchase. Create a budget and stick to it. Get rid of unnecessary expenses.
disadvantages of online banking
Start-up time - To register for your bank's online program, you'll probably have to provide ID and sign a form at a bank branch. Variable online services, according to the given bank - You'll need to spend some time reading or watching the online training for each bank you deal with. Changes to the web site - Periodically banks upgrade web sites, which may interrupt service. The issue of security - For some people, it's hard to trust that online banking is safe. Read on to see how you can tell if a given web site is secure.
investment options
Stocks, that is, purchased certificates representing shares of ownership in a company. If the company does well, the value of the stock increases; if it does poorly, the value decreases. Mutual funds, which are professionally managed collections of money from a group of investors. A fund manager decides where to invest the money while trying to outperform other investments and minimize risk. Retirement investments, which let you save and invest money tax-free until you withdraw it when you retire. In addition, you design the investment strategy within the investment plan. Real estate, which is another common way for individuals to invest their money. To invest in real estate, individuals buy and sell land, houses, and buildings.
laws and regulations that protect people when applying for a loan
The Truth in Lending Act -This act requires lenders to disclose certain information about the loan. A Truth in Lending disclosure will include the following information: APR, finance charges, amount financed, and total payment. Equal Credit Opportunity Act-This act promotes the availability of credit to all creditworthy applicants. Lenders are not allowed to make a decision to approve a loan based on factors such as race, color, religion, national origin, sex, marital status, age, or disability. This act also restricts the lender from requesting this information during the loan application process. The Fair Credit Reporting Act (FCRA)-This act requires a lender to notify you if you are denied a loan or credit because of information in your credit report. The Fair Debt Collection Practices Act (FDCPA)-This act helps eliminate abusive debt collection practices. Under this law, debt collectors can't contact you at work if you have told them not to call you there. They also may not use threats of violence or other criminal means to harm you or your property, call you with the intent to annoy, abuse, or harass you, call you without identifying themselves, or use deceptive or misleading methods to collect debt. The Fair Credit Billing Act (FCBA)-This act requires creditors to promptly fix billing mistakes and promptly process payments. If you think there is an error on your bill, you should notify your creditor in writing within sixty days of receipt of your incorrect bill.
how to calculate debt to income ratio
To calculate this ratio, add up the amount you spend each month on your debt. This includes the amount you spend for car loans, home loan, credit cards, installment loans, or any type of credit. Then, divide this amount by your total monthly income. Next, multiply that number by 100 to come up with a percentage. The result is your debt-to-income ratio. So, the formula is: Debt-to-income ratio = debt / income x 100
how to protect yourself from scams:
To protect yourself, become educated and informed by reading the newspaper or listening to the news. It's also important to read all agreements or contracts before signing them. If something sounds too good to be true, it probably is. Also, only donate money to organizations you've researched. If you suspect a scam, call the FTC (Federal Trade Commission) toll-free hotline: 877-FTC-HELP (877-382-4357).
different types of mortgages
Traditional mortgage-The traditional, or most popular, mortgages have a fixed interest rate and a loan period of thirty years. ARM -An ARM is an adjustable rate mortgage. The rate is fixed for a certain amount of time, such as the first six months or two years. Then, the interest rate may increase. The rate adjusts periodically, perhaps every one or two years. For example, one ARM's interest rate may increase up to 2 percent each year and as much as 6 percent over the entire loan period. As you might guess, these types of loans are risky. You may be able to afford the original loan payment of $1,000 per month, but add on 6 percent to the interest rate and the loan payment each month is now $2,000-a big difference. Before obtaining an ARM, you would want to be confident that you can afford the highest possible payment. Balloon mortgages-Balloon mortgages have low interest rates. However, the loan term may be as short as five years. When the term is up, the entire balance of the loan is due. Who would want a balloon mortgage? Someone who knows they will keep the loan only for a short time. Government-backed mortgages-Government loans, such as FHA and VA loans, make it easier for some people to obtain a mortgage. They require a smaller down payment than traditional mortgages. They allow the individual to have a higher amount of debt and perhaps even borrow the down payment from a family member. For most loans, you are not allowed to borrow the down payment because you will have to pay back the money you borrowed, in addition to the monthly mortgage payment. The VA loans are for veterans of the army, navy, air force, or marines.
laws and regulations that protect checking and savings accounts
Truth in Savings Act-The Truth in Savings Act enables consumers to make informed decisions before opening an account. Because of this law, banks must provide account information to consumers when they ask for it. The information needs to be clear and in writing so consumers can use it to shop for the best account. The bank is required to include interest rate information, balance requirements, and fee information. Electronic Fund Transfer Act-The Electronic Fund Transfer Act establishes rights of consumers who use electronic fund transfer services such as ATMs, transactions over the telephone and on the internet, and debit cards. This act requires financial institutions to limit how much a consumer is responsible if an ATM or debit card is lost or stolen. It also protects them if there is an error in a transaction. Expedited Funds Availability Act-Usually when you deposit a check, the bank holds the money a few days until the check clears. This act limits the amount of time a bank can hold the money. FDIC Deposit Insurance Regulations-FDIC insurance protects your money if the bank fails.
principles financial experts recommend
Understand your risk tolerance. Determine how much risk you are comfortable with. Remember, there's a connection between risk and return. Learn as much as you can about the investment from stock tables, company information, financial magazines, and reliable financial web sites. Keep investments simple, and don't be afraid to ask questions so that you understand completely. Look at past performance of the investment, remembering that past performance is not a guarantee of future performance. Consider how long you plan to keep your money in the investment. Some investments are better for longer term and are less liquid. Continuously evaluate your plan. The ideal investment products for you will change over time, so reevaluate what you have from time to time. Keep investment expenses low. High trading fees or fees for withdrawing money from a CD can add up. Stick with it. After you have developed your saving and investing plan, stay with it.
should you buy the regular or extended warranty? here's what to consider
What do you already get for free? If the product already has some type of warranty, think about what, exactly, the extended warranty is getting you. Do you get extra service with the warranty? For example, some extended warranties are more like service contracts. A service contract for a car may provide free oil changes for three years. Compare the price of the product and the price of the warranty. If you're buying a $70 DVD player, and the warranty costs $40, it's not worth the price. For not much more, you can buy a new DVD player. However, if you are buying a new laptop for $1,800 and the warranty is $150, the warranty may be worth purchasing. Think about the chances that the product will actually break or fail. Something that has few parts and is very durable may not need a warranty. On the other hand, for something more fragile and with lots of parts, it may be a better choice to get the warranty.
info about car loans
When comparing car loans, you should look at the APR. A car loan can be used to purchase a new or used car. The car itself is the collateral for the loan, which means if you don't pay off the loan, the bank can repossess it. New car loans typically have a loan period of three to seven years, and used car loans have a loan period of two to five years. Remember, the shorter the loan period, the less you will pay for the total cost of the loan. The title is a certificate indicating who owns the car. If you pay cash for the car, you'll have possession of the title and your name will be on it. However, if you secure a loan to pay for the car, the title will indicate who the lender is. You can obtain a car loan at a bank, credit union, savings and loan, or at a car dealership. Run your credit report and dispute any errors a few months before shopping for a car, so that there are no surprises during the approval process. When selecting a car loan, don't make a decision based solely on the monthly payment. Think about the total cost of the loan. Remember, the total amount you'll pay depends on the price of the car, the APR, and the loan period.
when using a savings account...
When you give the teller your withdrawal slip and bankbook, you will also need to provide identification, such as a passport or driver's license
how to reconcile your checkbook (check your balance with the balance the bank sends you)
Write a checkmark in the appropriate box for each transaction that appears on the statement. Record any transactions that appear on the statement, but do not appear in your register. Write the ending balance from your bank statement. Add the deposits that have not cleared. Subtract any checks that have not cleared. If the amounts do not match, look for mistakes.
steps in completing a deposit slip
Write the date of the deposit in this field. If you are depositing currency or dollar bills, write the total amount here. If you are depositing coins, write the total amount here. If you are depositing a check, write the check number here. Write the amount of the check here. If you are depositing more checks than can be listed on the front, continue to list them on the back. Write the total amount of the checks from the back on this line. Write the total amount you are depositing here. If you are making a deposit inside a bank with a teller and you want to receive cash back from your deposit, write the amount you want in this field. Write the total amount of your deposit in this field.
how to write a check
Write today's date on the date line. Write the name of the person or the company you are paying on the payee line. Write the amount of the check in numbers on the line following the dollar sign on the right side. Write the amount of the check in words on the line under the payee line. Sign your check on the signature line.
reasons to start saving
You have money to put toward your goals. You improve your standard of living. You have money for emergencies. You learn to manage money better.
what are some of the drawbacks to researching financial information online?
You must be extra careful to look at the person or organization behind the site before relying on its advice. Information that is suitable for one person may not be suitable for you. For example, a financial advisor is likely to advise a person who is sixty-two to invest in low-risk investments. However, that financial advisor probably would not give this same advice to a person who is twenty-three. Check to make sure the information is age appropriate
disadvantages of renting
You're not the owner of your home. Your rent may increase. You might not be able to renew your rental contract, and then you'll have to find a new place to live. Your money is not being invested or increasing in value.
deposit account
a bank account that lets you add money to the account
checkbook register
a booklet used to track deposits and withdrawals from a checking account
bank
a business and financial institution; a safe place to keep your money
debit card
a card that can be used to pay for products and services or be used at an ATM; looks similar to a credit card, but the payment amount is subtracted directly from an account
filing status
a category on tax forms that is closely tied to marital status; categories are: single, married, head of household, and widower
savings and loan
a financial institution that specializes in home loans
salary
a fixed amount of money periodically paid to a person for work
W-4 form
a form prepared by an employee for the employer to specify exemptions and determine the amount of taxes to be withheld from the employee's paycheck
scam
a fraudulent scheme used to make money
misconception
a misunderstanding; a mistaken thought or idea
credit union
a non profit financial institution formed by a large corporation or organization for their employees and members
beneficiary
a person who receives the payment from a life insurance policy
entrepreneur
a person who takes a risk to create a new product or to develop a better way to operate a business
occupation
a person's usual work or business; a way of earning a living
budget
a plan for how you will spend and save your money
account verification
a process where banks check your credit history to make sure you will be a responsible account holder
financial institution
a public or private organization that collects and invests money and offers financial services
stop payment
a request by an account holder to the bank not to pay a specific payment
claim
a request for payment from an insurance company
financial institutions are...
a safe place to keep money, and they offer financial services, such as checking accounts, online banking, and loans. Financial institutions make money by collecting and investing it.
tax return form
a tax form that an individual completes to calculate how much is owed to or refunded by the IRS
W-2 form
a tax from that an employer sends to employees after the end of the year to list income and amount paid in taxes
responsible
accountable, reliable, dependable
make sure you understand the terms before signing up for a new credit card
always look at the apr, grace period (typically 25 days), credit limit, read the disclosure
insurance policy
an agreement to cover or reimburse an individual for a loss that occurs
withholding allowances
an amount an individual enters on a W-4 form that helps an employer calculate the amount of income tax to subtract from an employee's paycheck
co-payment
an amount the insured person pays to cover a portion of a doctor bill or cost for prescription
mean
an average
stockholder
an individual who owns one or more shares of stock in a joint stock company
literacy
an individual's knowledge of a certain area or field
career
an occupation or profession that usually requires special training
money order
an order for the payment of a certain amount of money; resembles a check and is typically used to pay a bill
financial
anything that has to do with money and investments
relevant
appropriate, suitable, fitting
three types of financial institutions
banks, credit unions, and savings and loans
savings options
basic savings accounts (no min. balance, few restrictions, low interest rates 2%) high-yield savings accounts (more restrictions, minimum balance, 3-4%) money market accounts (higher interest rates, larger deposit) online savings accounts (higher interest rates) credit union savings accounts (higher interest rates)
financial risks
becoming a victim of a scam, when people commit crimes and take advantage of others by setting up fraudulent schemes to steal their money; losing money in an investment, such as stocks, bonds, real estate and other types of investments; losing cash; becoming the victim of theft if your home is burglarized, your wallet is stolen, or someone steals your credit card number; paying for expensive repairs; becoming disabled with an illness or injury so severe it prohibits you from working; becoming the victim of identity theft, or the act of stealing personal information in order to steal someone's money; losing a job; being involved in an accident; experiencing product failure; becoming ill; experiencing a natural disaster.
reasons for having a budget
being able to afford the things that are important to you; reducing stress; avoiding financial problems; making your money grow; knowing what you can and can't afford;
sources of financial information:
books; newspaper articles; magazine or journal articles; presentations; classes; news and programs on television; pamphlets and brochures; Web sites; experts, such as financial advisors; bank employees; other people you know
what to do when you invest to prepare for the risks...
but the value of the stock decreases. Such people have lost much of the money they invested. So it's wise not to invest all your money in one type of investment. And, always make sure that you have enough of an emergency fund set aside before you invest. You should have enough money to pay your necessary bills for at least six months, and some experts recommend that you have enough to live on for nine months.
factors that affect salaries are:
career choice; education; skills; supply and demand; experience; college and gpa
other types of cards
charge cards, travel cards, entertainment cards,
charitable organizations
churches Native American tribal governments a community chest, corporation, trust, fund, or foundation organized under federal or state government regulations such as the Red Cross war veterans' organizations domestic fraternal societies such as the Lion's Club and Rotary Club certain nonprofit cemetery companies foreign charitable organizations
how to open and maintain a checking account
complete the proper paperwork, show identification, go through account verification, and sign a signature card. Maintaining an account means making deposits and withdrawals, recording transactions in the checkbook register, and keeping track of your balance.
advantages of online banking
convenience; accessibility even when you travel; open access all day, every day; quick transaction speed; efficiency because you can manage different accounts at one site.
variable expenses
costs that change in amount
fixed expenses
costs that remain the same amount
commonly used sale techniques
coupons rebates promotional pricing (lowering the price on some items for a short amount of time) free trial offers samples demonstrations product displays contests or games point-of-sale displays (signs that stick out into the aisle from the shelf or signs that sway when a consumer walks by) loyalty programs (earn points for shopping at that store) negative option (merchandise arrives automatically unless the consumer takes steps to stop shipment and billing; often used by book and music clubs)
PACED is a decision-making process for tough financial decisions. the steps are...
define the Problem list the Alternatives select the Criteria Evaluate the alternatives make a Decision
At my age, I really do not need a budget
disagree
Sellers must legally tell a buyer if a good or service is not good quality
disagree
When I consider a full-time job offer, the rate per hour or the salary is all that should influence my decision
disagree
When an item I want is on sale, I think that I should buy it
disagree
i want to buy my best friend an expensive birthday gift that i can't really afford, but i know she would love it
disagree
costs involved with mortgages
down payment; closing costs; taxes; interest; insurance.
possible rewards
earning money; flexible schedule; independence; excitement and motivation; creative freedom; variety; personal satisfaction.
what are some of the benefits to being responsible with your money?
earning more money; having good credit; having more opportunities; gaining independence; being prepared for an emergency.
gross pay
earnings before deductions for work or from other sources, such as rent or investment
factors that should affect which financial institution you select
fees, locations, services, interest, hours, and minimum account balance.
services that can help you with saving and investing
financial advisement; fund manager; full-service stock broker or brokerage firm.
some services are
financial advisement; fund manager; full-service stock broker or brokerage firm.
resources to find more info about stocks
financial advisers; articles in financial magazines and the financial section of the newspaper; full-service stock broker or brokerage firm; investment books at the library or book store; millions of online articles about various financial topics; (Note: make sure they are written by a reliable source.) suggestions from analysts who are accessible online; web sites that provide stock quotes and tables; customer service representatives at your bank.
resources, tools, and services to help with financial planning
financial advisors; articles in financial magazines and the financial section of the newspaper; full-service stock broker or brokerage firm; investment books at the library or book store; online articles about various financial topics (Note: make sure they are written by a reliable source.); suggestions from analysts; web sites that provide stock quotes and tables; representatives at your bank.
most budgeting software can...
generate graphs and reports; alert you when it's time to pay a bill; create a plan to reduce your debt; create a savings plan to reach financial goals; organize information for taxes.
goals and decisions are connected, and...
goals should serve as guidelines to decisions, and your decisions affect whether you reach your goal
employee benefits may include...
group insurance plans; retirement plans; tuition reimbursement; bonuses; vacation and sick leave; stock purchase plan; health insurance.
different types of insurance policies
health insurance, car insurance, life insurance, disability insurance, and others.
rule of 72
helps calculate the return on savings or how much money will grow used to figure out how long money needs to be in a savings account in order to double in value years to double = 72 / interest rate
before opening a savings account, think about...
how long you'll be keeping your money in the account; how often you'll want to withdraw money; how much money you'll keep in the account.
capital gains
income earned by the sale of assets, such as stocks or property, which income is the difference between the price paid and the selling price
liability coverage
insurance that covers injury or loss to other people, for which injury or loss you are responsible
property coverage
insurance that covers the contents of your home, such as furniture, television, bikes, appliances, and clothing
compound interest
interest on the money in your account + interest you have already earned from the bank A = P (1 + r)^n P is the principal
when selecting stock...
invest in what you know, do research, look at P/E ratio, 52 week high, 52 week low, and dividend, all found on stock table
assets
items owned that could be sold for cash
purpose of a checking account
keep your money safe and make it convenient to pay bills. In addition, having a checking account allows you to use the services and tools at a financial institution.
how to manage financial risks
keeping your money in a safe place; financial planning or meeting with a financial adviser; obtaining health, car, home, and disability insurance; protecting your personal information and your identity; becoming educated and informed in order to avoid scams; having an emergency fund; buying products with warranties; knowing consumer rights.
how to minimize financial loss
keeping your money in a safe place; financial planning or meeting with a financial adviser; obtaining health, car, home, and disability insurance; protecting your personal information and your identity; becoming educated and informed in order to avoid scams; having an emergency fund; buying products with warranties; knowing consumer rights.
consumer rights
laws that protect people who make purchases
steps of creating a budget
list sources of income list expenses monitor your progress make adjustments
consequences for excessive debt
low credit score, subprime lending, foreclosure, garnishment, judgment, lien, repossession bankruptcy
a good goal is...
measurable, descriptive, including a plan, long-term goals are broken up into short-term goals which helps you stay focused on long-term goals and gives you accomplishments along the way
liabilities
money owed
a good financial plan includes...
net worth statement, financial goals, a budget, a saving and investing plan, and an insurance plan
the benefits of financial responsibility...
offering you the chance to gain more independence
the two types of costs are
ongoing costs (rent, salaries) and start-up costs (infrequent)
some tools are
online trading accounts for buying and selling stock from any device that can connect to the internet; online portfolio to quickly view your investments and their value; spreadsheet to list your investments; online calculators to calculate compound interest or the value of a savings bond.
investments tools include
online trading accounts for buying and selling stock from any device that can connect to the internet; online portfolios; (Note: Online stock brokerage firms, such as E-trade and Fidelity, offer portfolios to help you quickly view your investments and their worth.) spreadsheets to list your investments; online calculators to calculate compound interest or the value of a savings bond.
become prepared for investing by
paying off credit card balances, saving up an emergency fund, and learning the basics about investing.
when selecting a savings account, you should look at
penalties and fees minimum balance interest rates interest thresholds variable interest rates the annual percentage yield (APY)
look at these four numbers before you invest
price-to-earnings ratio (P/E) 52-week high 52-week low dividend
parts of loan that determine how much is paid
principal; finance charges; loan repayment period.
impulse purchases
purchases that are not planned
benefits of having a budget
reducing stress; avoiding financial problems; making money grow; affording the things that are really important; knowing what you can and can't afford.
continuous costs
rent; other fees, such as parking, storage, or pet fees; utilities; renter's insurance to protect against the loss of possessions in case or fire, water damage, or burglary.
phishing
requesting confidential information over the internet under false pretenses to fraudulently obtain credit card numbers, passwords, or other personal data
how to make a business
research if it's possible create a business plan, summarizes how business will operate and make money analyze the costs and risks
consider this before investing
risk rate of return liquidity opportunity cost
differences between investing and saving
risk vs safety potentially earn more money vs earn a lower amount in interest not federally insured vs federally insured money sometimes earned through dividends vs no dividends; earns interest necessary to sell an investment to use the money vs no need to sell; make withdrawals
benefits of keeping your money in a financial institution
safety convenience growth cost security financial future
financial plan includes
saving and investing plan
special savings accounts
savings bonds: certificate, issued by US gov, $50-$10,000 CDs: certificates of deposit, highest interest of any savings option, longer you promise to keep money in the more you get money market accounts: higher rate of interest, must start with a large deposit to open, restrictions on withdrawals frequency 529 plan: savings plan for edu, operated by state or edu institution, set aside for future college expenses IDA: individual development account, money deposited is matched by foundation, corporation, gov agency, or any organization club account: special reason, holiday, vacay, or college treasury securities include bills, notes, and treasury inflation-protected securities, or TIPS
risks you could face:
scams identity theft investment loss job loss cash loss accident or injury theft product failure expensive repairs illness disability natural disaster
sources of financial aid
scholarships, grants, student loans
resources for researching career options
school counselors; charts and tables; professionals; books; Web sites.
ways to deposit a check
sign your name on the back of the check and complete a deposit slip. You can visit a teller inside the bank, use a drive-up teller window, or use an ATM to make the deposit.
spreadsheet
software that contains rows and columns used to make calculations, organize information, and make comparisons
dependent
someone who depends on another individual for food, shelter, and other necessities, usually a child
rewards
something that causes or increases personal satisfaction
risks
something that causes the possibility of a loss
examples of good habits...
spending only what you have sticking to a budget putting money into savings organizing your financial information recording debit card purchases promptly
tools for creating a budget online
spreadsheets; budgeting software; online money management tools; online banking.
criteria
standards for evaluating something
types of investments
stocks; mutual funds; retirement investments; real estate.
net pay
take-home pay; the portion of the wages that the employee actually gets to take home
to learn more about investment products
talk to a customer service representative at your bank; meet with a reputable financial adviser; research investments on reliable web sites.
goal
target or result which is desired
deductions include...
taxes, costs for insurance, and money that you set aside for retirement.
deductible
the amount a person has to pay when making an insurance claim, with the remaining cost covered by the insurance company
supply
the amount available
saving and investing plans can include...
the amount of money, types of savings accounts, financial institutions, types of investments, names of stock, etc.
premium
the amount paid by the policyholder for insurance
net worth
the amount you have minus the amount you owe
identity theft
the crime of stealing an individual's personal information in order to gain from that person's finances
demand
the desire or need for a product or service
revenue
the income a business makes
financial literacy
the knowledge about money and what you can do with money
income
the money received for work or products sold and from other sources, such as rent or investments
bodily injury limit
the most the insurance company will pay
payee
the person or company to which you are writing a check
taxable income
the portion of income that is subject to being taxed
the higher the risk, the greater the chance for higher return, pyramid of types
top: collectibles tier 2: stocks and mutual funds tier 3: savings bonds, gov bonds bottom: cash, bank savings accounts, bank CDs, bank money market accounts, savings and protection
reliable
trustworthy, information you can trust with certainty
services financial institutions may offer
view account balances order checks transfer money issue stop payment track recent account activity apply for loans pay bills gain information obtain a copy of a processed check spending report savings plan alerts budgets
financial institution tools and services
viewing account balances and statements to reconcile a checkbook; transferring money; tracking recent account activity; paying bills; obtaining a copy of processed checks; ordering checks; issuing stop payment requests; applying for loans; gaining information; creating a spending report; creating a savings plan; setting alerts; creating a budget.
ways to withdraw money
your checking account by using an ATM, visiting a teller inside the bank, visiting a teller at the drive-through window, using your debit card, transferring money, paying a bill online, or by writing a check.
let's review financial literacy...
Remember, financial literacy is the knowledge about money and what you do with your money. Becoming financially literate will enable you to make smart decisions about money. It is your responsibility to gain the knowledge you need to make those decisions. We looked at several reasons why it is important to gain financial literacy. Those reasons included: reducing stress, saving money, and earning money.
examples of misconceptions...
Sellers need to inform you if goods or services are poor quality. Buying stock is always a good investment. You should get a credit card as soon as possible. Banks only give you loans for what you can afford. You don't need a budget until you're much older. High school is the only education needed for most jobs.
ways to be financially responsible
Set a budget and stick to it. Save money. Take savings directly out of your paycheck before you have the chance to spend it. Set short- and long-term goals and review your goals periodically. Learn money management skills. Spend less money than you make. Make all payments on time. Know the difference between needs and wants. Pay with cash instead of credit. Discuss finances with others affected. Be a smart shopper. Organize financial documents. Learn about investment strategies. Have six months income saved in case you lose your job. Know how to recognize the warning signs of too much debt. React quickly to financial problems before you ruin your credit score. Monitor you credit score. Obtain appropriate insurance. Educate yourself about personal finance by consulting relevant magazines, books, and reliable Internet sites. Seek information when faced with tough financial decisions.
ways to be financially responsible...
Setting a budget and sticking to it. Saving money by taking it out of your paycheck before you have the chance to spend it. Learning money management skills. Spending less money than you make. Discussing finances with others affected. Being a smart shopper. Organizing financial documents. Reacting quickly to financial problems before they affect your credit score. Obtaining appropriate insurance. Educating yourself about personal finance by reading books, magazines, and reliable Internet sites.
short-term goal
a desired result which may be attained in less than one year
long-term goal
a desired result which may be attained in more than one year
Medicare
a federal program that pays for health care for people age 65 and older
commission
a fee paid to an employee for their sale or services, which fee is usually based on a percentage of the sale price
warranty
a written guarantee given to the purchaser, usually specifying that the manufacturer will make any repairs or replace defective parts free of charge for a certain period of time
the negative effects of financial irresponsibility...
affects yourself and those around you
At my bank, there are people willing to help me with my financial questions
agree
I think that I make good financial decisions because I follow the advice of my parents
agree
Saving to buy a car might mean that I decide not to go on a trip with my friends
agree
When I use my debit card, I always enter the amount in my check register
agree
when i receive income, i put money in my savings account
agree
deduction
an amount that is subtracted
relevant information is...
appropriate for your age; suitable for your situation.
how to evaluate websites
by content and not appearance A better way to evaluate a Web site is to look at its address or URL. This will tell you a little about the author or creator of the site. Site names ending in .edu are educational, .org is used in the Web addresses of organizations, .gov URLs are government sites, and .coms are commercial sites. If the Web address ends in .edu, .org, or .gov, it can generally be considered reliable. However, you will need to take a closer look if the URL ends in .com. In this case, use the characteristics of reliable sources listed above to test for reliability. Avoid Web sites that are simply selling a product or service. Also, avoid Web sites created by individuals who are not experts.
possible risks
costs exceeding revenue; fire, tornado, flood, or other natural disaster; theft; the product failing; decrease in demand for the product; ineffective advertising and sales; slow production; loss of data from the computer system; employee or client injury; inconsistent income, or none for months at a time; high health insurance; large tax bills; clients who don't pay their bills; stress.
As a teenager, my only possible source of income is the paycheck from my employer
disagree
Buying stock in a company would be a good way for me to invest my weekly paycheck
disagree
I will start saving as soon as I have a full-time job
disagree
If I lost my wallet with my debit card inside, I would not be concerned because I could get another at the bank
disagree
If I needed money for an emergency, a pay-day loan officer would be a good adviser for my credit needs
disagree
It is important that I get a credit card as soon as I can
disagree
My credit score is between the lender and me
disagree
if i want something that i cannot pay for now, i borrow from my family or friends
disagree
when i figure the amount of my next paycheck, i calculate the hours worked, multiplied by the rate per hour. this tells me how much my check will be
disagree
when i graduate from high school, i will be finished with my education
disagree
things that have to do with financial literacy
interest rates on money in a savings account warranties home insurance car payments and terms jobs student loans taxes banks stocks open a checking account decide on a career path invest money create a budget select the correct car loan make financial decisions complete tax forms invest wisely purchase a house
other factors that may affect your income:
location; college attended; GPA; experience.
if you find something possibly unreliable...
look for other sources to confirm it
start up costs may include
machinery to make the plastic gadget; office equipment, including computer equipment; fixtures, counters, and installation; paying a graphic designer to create a company logo; printing brochures, business cards, and stationary; paying lawyers to check if someone has already invented this gadget; consultants who can offer their expert advice; travel to other factories to learn how they work; production costs for producing a demo gizmo gadget; Web site development for selling the product; signage for your building.
dividends
money paid to people who own stock in a company from the company's earnings
wages
money received for work
interest
money the bank gives you when you keep your money in one of their accounts
what are some of the costs of being irresponsible with your money?
paying more money in fees, penalties, and interest; earning less money in interest; being dependent on others.
employee benefits
perks (extra benefits) that a company provides their employees; may include paying for health insurance or providing a retirement plan
financial literacy can...
reduce stress and frustration; save you money; save you time; increase the return on your invested money; help you make smart decisions; help you earn more money; reduce your risk of losing money; help you make smart purchases; help you reach your goals
profit
revenue minus costs
ongoing costs may include
salaries for all employees; taxes, or money you pay to the government after each sale; rent for the building; materials, such as plastic; accounting fees to pay an accountant to calculate employee's wages; advertising; insurance; interest and principal on loans from the bank; shipping the gizmo gadget to stores; repairs on the machinery; telephone; Internet connection and Web site hosting; travel for employees to make sales; utility costs, such as electricity.
sources of income
salary; interest from accounts; capital gains; dividends from stock; commission; bonuses; gifts; winnings; tips; rent.
taxable income includes
salary; interest on any bank accounts; interest on all bonds except municipal (tax-free) bonds; dividends; bonuses; unemployment compensation; tips; capital gains; gambling and lottery winnings; most withdrawals from a retirement account.
costs
the price paid to acquire, produce, or accomplish something
steps for setting a goal
1. calculate your net worth by subtracting your liabilities from your assets 2. write your goals 3. prioritize your goals 4. evaluate your progress
Where could you go to help confirm or refute the possibly unreliable information from the advertisement?
A source like the Federal Deposit Insurance Corporation (FDIC) Web site would be reliable because it is a reputable organization. A source like your friend's older brother probably would not be reliable, unless he is a registered financial adviser
a person who wants to start a business should consider the following
Is there enough money set aside to pay personal bills? How expensive will it be to start the business? Will a bank provide a loan to start the business? Are there laws regulating this type of business? What type of insurance is needed?
important info about careers includes:
Job description - What does an employee in this field do at work? Educational and skill requirements - Does a person working in this career need a master's degree or one year of on-the-job training? Job outlook - Are there many job opportunities in this field? Advancement opportunities - Is it possible to be promoted into other positions? Salary - How much money do people in this career make? Geographic locations - Where can you work if you choose this career? Amount of travel - Will you spend three weeks out of every month traveling, or will you travel once in a while?
current jobs in demand:
Network administrators work with the computer network of a business. Compliance directors ensure that all business units are in compliance with financial policy and reporting regulations. They track laws and regulations that might affect the organization's policies and implement necessary changes. Senior financial analysts examine financial information in order to make good suggestions to businesses on how to invest money. Physician assistants practice medicine and do many of the jobs doctors do. They can take medical histories, examine and treat patients, order and interpret laboratory tests and X-rays, make diagnoses, treat minor injuries, instruct and counsel patients, and order or carry out therapy. Information systems security managers work to protect confidential business information for customers and employees.
reliable websites
The Investor Protection Trust (IPT) Web site (www.investorprotection.org) provides information to make informed investment decisions. The Financial Industry Regulatory Authority (FINRA) Web site (www.finra.org) offers information on a wide range of issues that affect your money and investments. The Securities and Exchange Commission (SEC) (www.sec.gov) provides information to help you invest wisely. Rutgers University (www.njaes.rutgers.edu/money) contains resources, courses, tools and templates, including financial planning worksheets. eXtension (www.extension.org/personal_finance) has answers from experts and resources on topics like credit and savings. Plus, it has an extensive glossary of financial terms. The U.S. government offers information about financial education programs at MyMoney (www.mymoney.gov) as well as information about many other topics.
characteristics of reliable sources:
The author of the information is an expert in the field, and the source gives biographical information, including the author's education and job position. A recognized and reputable organization published the information. The information is coming from investment advisers who are registered or licensed. The source is current. The source provides documentation-where they got their information. The information can be verified by other sources
characteristics of unreliable sources:
The purpose of the information is solely to sell a product or service. The information is biased or from the sole point of view of a social or political group. The information sounds too good to be true. (Become a millionaire by age 25!) The information is outdated. The information is from an individual without the necessary experience
good goals...
Use detail. Make it measurable. Include a plan. Break down long-term goals into short-term goals.