Financial Literacy - Final Exam

U5: What are the types of scholarships?

- Academic - Athletic - Career - Creative - Community Service - Scholarships for underrepresented students

What are some questions you should ask before you make a purchase?

- Are my expectations too high? - Am I overspending? - Am I buying something I don't really want or need? - Am I buying for the right reason? - Am I purchasing on a whim?

U5: What are the 6 factors to consider when choosing a career?

- Earnings - Benefits - Flexibility - Location - Expectations - Job Satisfaction

U3: What factors determine your credit score? How much each influence your credit score?

- Payment history: 35% - Amounts Owed: 30% - Length of Credit History: 15% - New Credit: 10% - Types of Credit: 10%

U1: What is value? What is purchasing power? Does purchasing power tend to increase or decrease over time? Does the money you invest tend to increase or decrease(in value) over time?

- When you buy something that you want or need, you are making a decision about value. In other words, you've decided something is important enough to you that it's worth spending money on. - The value of money is its purchasing power — what you can buy with it - Purchasing power decreases over time due to changes in the economy - Money that you invest usually increases in value over time.

U1: What factors can influence the amount of expenses you have?

- your age - where you live - whether you live with others - the kind of lifestyle you prefer

U1: What is a need? What is a want?

-A need is something necessary for survival, like water, shelter, or food. -A want is something that would be nice to have but is not needed for survival

U1: What are some questions you should ask when choosing what kind of account to open?

1. "Which type of account is right for me?" That depends on why you want to open the account. Do you want to use a debit card to make purchases or pay bills? Then a checking account would probably be your best choice. But if you're trying to save money, then a savings account or even a certificate of deposit might work best for you. 2. "Which account features are important?" Make sure you understand minimum balance requirements and any possible fees. Ask about interest rates. Look at the online banking options each account offers. If you're interested, ask about debit and ATM cards. Basically, you should choose the most convenient account that helps you meet your goals at the lowest cost. 3. "What do I need to open an account?" You must be at least 18 years old to open a checking account in your name only. If you are at least 14 years old, you can open an account if an adult agrees to cosign. Once you have selected an account, you will fill out an application. This can be done in person or online. You will need proof of identification, your Social Security number, your mailing address, a phone number, and an email address.

U3: What are the 4 questions you should ask yourself before you make a purchase with your credit card?

1. Can this purchase wait? 2. Do monthly credit card payments fit into my budget? 3. Will I have enough money to pay the balance? 4. How will this purchase affect my credit history?

U3: Aside from choosing a reputable source, what are 5 other factors to consider when choosing a credit card?

1. Credit limits: - A variety of factors determine a card's credit limit, including income, credit history, and ability to afford payments. When you reach your card's credit limit, you cannot use the card to make further purchases until you pay off some of your debt. - How high a credit limit you can get will depend on whether you already have a lot of debt and whether you have other credit cards that you have reliably paid off. When shopping for a new credit card, look for options that give you a good-sized credit limit and a reasonable interest rate. 2. Interest rates: - Credit card companies make money by charging you interest on your purchases. The amount of interest, known as the interest rate, varies between companies and between cards. - Beware of very low introductory interest rates. Some companies offer low rates to lure new customers, but the rates increase after just a few months. Some creditors also offset low rates with high fees. 3. Minimum monthly payments: - People who cannot afford to pay their entire bill must at least pay a certain amount each month. This is called the minimum monthly payment. If you pay this amount on time, you will not be charged a late fee. But you will be charged interest on the money you still owe. - You can arrange for credit card payments to be paid automatically from your bank account. This is helpful, but it means you need to have enough sufficient funds in your bank account. 4. Annual fees and late fees: - Some credit cards charge an annual fee. Often, credit cards with annual fees offer lower interest rates — one of the perks of paying the annual fee. - Late fees occur when you don't pay your bill on time. You will also incur a late fee if you don't pay at least the minimum payment by the monthly due date. 5. Cash back and rewards programs: - Many credit card companies have rewards programs. Some cards offer from two percent to five percent cash back on selected purchases. - Credit card companies might also have rewards programs that enable cardholders to earn points. The points can be redeemed for travel, gift cards, or merchandise from specified retailers in its rewards program.

U1: What are the major drawbacks of digital payment?

1. Crime: - From get-rich-quick scams to identity theft, every new technology attracts those looking for ways to steal money. Anyone today can create a website and accept payments, so it can be difficult to know if a seller is legitimate. Beware of websites that request your banking details or passwords. 2. Overspending: - The convenience of digital payments can make it hard to keep track of how much money you actually spend. This is especially true if your budgeting skills are not strong. Apps can also charge fees that might surprise you, and you may be charged an overdraft fee if you try to spend more than you have in your checking account. - Some digital wallets will alert you if you are going over a predetermined spending limit. And many apps won't work if you have insufficient funds in your account to cover the transaction. 3. Privacy concerns: - Whenever you use an app, that information is recorded somewhere. This is true for numbers you call on your phone, where you travel, and even which groceries you purchase. - Law enforcement, government, credit bureaus, and others can access a lot of information about your purchasing habits when you use digital payment applications and credit cards. For this reason, people who are concerned about privacy issues use cash for many of their transactions.

What are the steps of buying and selling bonds?

1. Decide how to buy: - As with stocks, bonds can be purchased through a broker. - Bonds can also be purchased through bond mutual funds, such as an exchange-traded fund (ETF). These funds allow you to buy bonds from different sources, similar to a mutual fund for stocks. This is a good option for investors who don't want to do a lot of their own research. - Lastly, treasury bonds can be purchased directly from the federal government at the TreasuryDirect website without paying any fees to brokers. 2. Research rating & yield - Bonds are given a grade by bond-rating agencies. Grades range from AAA to D. A bond's grade reflects its strength and is used by investors in their calculations. If a company is unlikely to pay back its bonds, it is probably not a good idea to invest. - A bond's yield to maturity (YTM) is a measure of the return on the bond if it is held until it matures and all the interest is reinvested. There are special bond calculators that can tell you the actual return. You can research a bond's rating and yield to see if it is a good fit for your portfolio. 3. Decide to hold or sell - The two ways to make money from bonds are by holding and by selling. If you hold a bond until its maturity date, you collect interest income twice a year until the bond matures. - You can also try to sell your bond for more than the principal you paid. Other investors may want to buy your bond if newer ones are being sold at a lower interest rate.

What are the 5 steps of filing a 1040 form?

1. Gather your documents: - The most important of these documents is your W-2 form(you should receive a W-2 form from your employer by January 31. If you had more than one employer in a calendar year, you'll receive more than one W-2 form) - past tax returns - receipts for any deductions you plan to take(i.e. childcare, education expenses, medical expenses, charitable donations) 2. Choose what type of deduction to take 3. Choose your filing status 4. Fill out and file your taxes 5. Pay taxes or get a refund

U3: Before deciding to declare bankruptcy, what consequences should you be aware of?

1. Harms credit report: - A bankruptcy will show up on your credit report for seven to 10 years. Potential lenders will take notice and be less likely to give you future loans. - Some employers review the credit of potential employees if it's relevant to the type of work they do. A bad credit report might make it harder to get certain jobs. 2. Loss of assets: As part of a bankruptcy agreement, lenders will sometimes seize assets. They do this in order to limit their losses. You may also be compelled to sell some possessions, including jewelry, furniture, and musical instruments — anything that has value. 3. Increased cost: - Bankruptcy can affect the costs of insurance policies because of the negative mark it leaves on a credit report. If you have a low credit score due to bankruptcy, your insurance rates can go up. - You will also have a difficult time borrowing money for at least seven years, and even then, your interest rates will tend to be higher.

U4: What are the 4 important parts of an auto insurance policy?

1. Liability: - Most states require liability coverage. If an accident is your fault, you are responsible for the damages the other person suffers. This liability includes damage to their vehicle and bodily injury. Liability coverage follows the driver. You are covered for liability even when driving a vehicle that is not your own. - When you purchase your policy, you set the limit of liability. This is the most money your insurance company will pay to the other party. 2. Collision: - Collision insurance pays to fix your car if it is damaged in an accident. For older or less valuable cars, collision insurance might not be worth it. But for newer cars it can be worthwhile. You can also add a policy to your auto insurance to cover rental car costs while your car is being repaired. - Nikki really needs her car for work and decides to get collision insurance. She choses to pay a higher deductible in order to lower her premium, so it will cost her $1,000 out of pocket to fix her car. 3. Uninsured motorist: - Not everyone is a responsible driver. What happens if someone else is at fault in an accident and they are uninsured? You can avoid this situation by purchasing uninsured motorist coverage. It covers you and anyone else in your car for property damage and bodily injury. - Uninsured motorist coverage also protects you if the other person's limit of liability is too low. 4. Comprehensive: - Comprehensive car insurance is also known as "other than collision" coverage — it can help you cover costs associated with non-collision related claims. These include protection from loss if your car is stolen or damaged by weather or a natural disaster. Like collision and uninsured motorist insurance, comprehensive insurance is optional. - Nikki decides not to pay for comprehensive insurance, but she does add uninsured motorist coverage and increases her limit of liability. She'll wait and get comprehensive coverage on her next car.

U3: What are the 4 concrete steps you can take to manage your debt?

1. List your debts and monthly payments: Keeping debts and payments in your mind can be confusing. Organizing this information in a document will help you understand them better. Be sure to include interest rates on each debt you owe to identify accounts that are costing you the most in interest. 2. Examine your expenses: You're going to need to figure out how much you can afford to pay creditors each month. To do this, determine what you absolutely need to spend money on. These fixed expenses could include rent, car payments, or groceries — in other words everything you need to survive. Then figure out where you can cut spending on items that are wants, not needs. 3. Create a payment plan: - Deduct your necessary expenses from your income. The money left over is the amount you have to make debt payments. - When creating your debt management plan, prioritize the debt with the highest interest rates. But don't neglect low-interest debt. Look for opportunities to consolidate, and decide if you need to contact any creditors to renegotiate loan terms. If you do not have money to pay debt, you will need to increase your income. 4. Follow your plan: Now that you've created a plan, be sure to follow it! You will make slow, steady progress by continuing to make monthly payments, and eventually your debt will subside. Try not to incur any new debt as you go. This will require some trade-offs on your part — like not spending as much money on take-out or going out with friends. Find low-cost ways to relax, like heading outdoors, reading, or spending time with loved ones.

U2: How does diversification compare to a purely low-risk or purely high-risk investment strategy?

1. Low-risk strategy: - An investor using a low-risk strategy will make investments in options like savings accounts, certificates of deposits, and bonds. While these investments are unlikely to lose value, they aren't likely to grow much either. - For instance, investing $10,000 in CDs for 10 years at a guaranteed return rate of 3 percent will total $13,439.16 in the end. That is a lower return on investment when compared to a high-risk or diversified strategy. 2. High-risk strategy: - High-risk investment strategies have the opportunity for higher rates of return — as well as bigger losses. - An investment of $10,000 in higher-risk stocks could return a rate of 20 percent over 10 years, growing the value of the initial investment to over $61,000. That's four times higher than the low-risk strategy of investing in CDs. But high-risk investments also have a good chance of losing their value, making the initial $10,000 investment worth nothing. 3. Diversified strategy: - A diversified strategy includes a mix of both high- and low-risk investments. This strategy balances the risk of your investments to achieve a higher return than a purely low-risk strategy with less risk than a purely high-risk strategy. - After 10 years of investing in a combination of low-risk certificates of deposit and high-risk stocks, a $10,000 initial investment could yield a 10 percent rate of return and be worth $25,937.42. That's less than half the value of the high-risk strategy of investing only in stocks, but twice as much as the low-risk strategy of investing only in CDs.

U3: What are 3 ways to use credit wisely in order to maintain good credit?

1. Lower balances: - If you can't pay off your credit cards in full each month, try to keep the balances as low as possible. Lenders want to see that you use your credit wisely and you are not borrowing more money than you can pay back. If you can, pay down credit cards completely or to a low balance. - In general, don't allow your credit card debt to exceed more than 20 percent of your total income after taxes. And you should not be paying more than 10 percent of your monthly income in credit card payments. 2. Lower debt-to-credit ratio - Your debt-to-credit ratio is how much of your available credit you are using. This percentage is calculated by dividing the amount of money you owe by your credit limit. For example, if your credit limit is $1,000 and you have a balance of $200, your debt-to-credit ratio is 20 percent. This means that you are using 20 percent of your available credit for this card. If you have more than one credit card, you can divide the total balance of all cards by the total available credit to calculate the ratio. - A low debt-to-credit ratio tells lenders that you use credit responsibly. A high ratio might indicate that you are using too much credit and may be unable to pay it back. Lenders generally like to see debt-to-credit ratios of less than 30 percent. 3. Limit applications: - Avoid making multiple applications for credit. It may be tempting to apply for several credit cards at once to see which one you get, but this will harm your credit score. Each time you apply for credit, an inquiry for a credit report is triggered. Too many inquiries in a short period of time might make lenders think that something is happening in your life that is causing you to borrow a lot of money. - For this reason, don't apply for a car loan right after you apply for a credit card and a student loan. Space out your new credit applications.

U1: What are the 4 broader things that your spending decisions can impact? How?

1. The environment: Your purchasing decisions can have positive or adverse effects on the environment. Single-use plastics, such as plastic bags, containers, and utensils, contribute to pollution of water and land. Reduce plastic use by carrying reusable shopping bags and your own containers for take-out food. 2. Animals: Millions of animals are slaughtered daily for food. Some products contain animal by-products or the manufacturers perform painful tests on animals to make their products. You can decide to purchase cruelty-free products and commit to consuming less meat — or no meat at all! 3. People: Some products, like coffee and chocolate, are grown in countries where farmers aren't always paid or treated fairly. Look for the "fair trade" label to buy products that ensure farmers and workers are treated well. 4. Communities: When you purchase goods that are produced locally, you reduce the travel cost of those goods, and you support people who live and work in your community.

U1: What factors can influence your spending habits?

Main factors: - age - income Factors that are harder to notice: - Advertising - Social Pressure

U2: What are the PROS & CONS of stocks?

PROS: - Stocks grow with the economy. If the economy is growing, business earnings are likely also growing, which will create jobs, income, and sales. - Stocks can have a high rate of return — better than most other investment opportunities. - The stock market makes it easy to buy and sell stocks. CONS: - It can take a lot of time to research companies and make good stock investments. - Investing in stocks involves a lot of risk. You could lose your entire investment if a company you invest in does poorly.

U4: How is renters insurance different from homeowners insurance? Is it required?

Renters insurance is similar, but since you do not own the building you live in, it mainly protects your belongings. Renters insurance is optional.

U1: What is financial literacy?

The ability to make good decisions about money and to use financial skills to manage credit, debt, and investments

U1: Definition of economy

The way a society manages the distribution of goods and services that people buy and sell.

U3: What happens when you don't pay the full amount you owe on a credit card?

When you don't pay the full amount you owe on a credit card, interest accumulates. Soon you are paying for interest upon interest.

U1: What are estimated tax payments? Who pays their taxes through estimated tax payments? Can independent contractors claim deductions on their estimated taxes?

a) b) If you're a freelancer or independent contractor, taxes are usually not withheld from your wages. Instead, you are responsible for paying your taxes when they are due. For most independent contractors, this is done through estimated tax payments c) Independent contractors get to claim allowable business deductions on their estimated taxes. These deductions help lower contractors taxable income.

U3: What is an annual percentage rage(APR)? How is the purpose of an APR? What are the 4 important things to consider about APRs?

a) (APR) The total amount of interest paid each year on a loan balance. b) The APR provides a bottom-line number that helps you compare rates offered by different lenders. c) 1. The APR is the total yearly cost of a loan: The APR calculates what percentage of the principal you'll pay each year based on the monthly payments. It is the annual cost of a loan, including interest and fees. 2. The APR is different from the interest rate: - Like an interest rate, an APR is expressed as a percentage. But unlike an interest rate, an APR includes other charges and fees. Because fees are included, the APR on a credit card or loan will be higher than the interest rate. - In general, you can think of the interest rate as a way to assess monthly costs and use APR to get an idea of the total cost of a loan. An APR is especially helpful when comparison shopping for large, long-term loans such as mortgages. 3. Not all APRs are the same: APRs can vary considerably. And some lenders charge different amounts depending on the type of purchase. A credit card company, for instance, might have a different APR for purchases than for cash advances. Or a bank might also charge a high-rate APR as a penalty for late payments. Finally, creditors may offer a lower APR to a borrower with a good credit history than to someone with a poor track record of payment. 4. The APR does not reflect the total cost of borrowing: - Not all fees and compounding interest are included in an advertised APR rate. Lenders sometimes also offer a low- or no-interest introductory APR to entice new customers, but the APR might jump much higher after the introductory period. - The Truth in Lending Act, which was passed in 1968, requires lenders to disclose the APR before a loan agreement is signed. Always make sure to read the fine print so you know if and when your APR might change.

U3: What is a credit score? Who determines it? What is credit history? Why does it interest lenders? What are Credit bureaus? What do they do? What is the purpose of credit reports? What do the FICO score ranges mean?

a) - A credit score is a number that is assigned to you to help a lender judge your ability to repay a loan. - A higher credit score tells potential lenders that you have a good credit history. - Credit scores are determined by credit bureaus who review your credit history and generate credit reports. b) - Every time you use a credit card or take out a loan, a record of the transaction is kept in your credit history. Whether you have made on-time or late payments on your credit card or paid off or defaulted on your loan is recorded as part of your credit history as well. - Aside from your payment history, lenders are interested in knowing how many credit cards you have and whether you've applied for credit recently. c) - A company called a credit bureau collects information about your credit history. There are three main credit bureaus: Experian, Equifax, and TransUnion. Experian keeps very detailed information about your credit balances. Equifax mainly keeps a record of your open and closed credit and loan accounts. TransUnion focuses more on your employment history. - Lenders use these different credit bureaus for different reasons. A bank loaning you a mortgage might be more interested in your payment history than your employment history, for example. An employer, on the other hand, might look at your credit report to see if you are reliable. d) Your credit score is calculated based on the data in your credit reports. In the United States, the most common form of credit score is known as the FICO score, which ranges from 300 to 850. A score below 580 is considered poor, a score between 580 and 669 is considered fair, a score between 670 and 739 is considered good, a score between 740 and 799 is considered very good, and a score over 800 is considered exceptional.

U3: What is a credit rating? What is its purpose? What are the 3 proactive steps that business owners should take to protect their credit data?

a) - A letter grade that conveys the ability of a business or government to repay a loan. - Rather than a credit score, businesses receive a credit rating in the form of a letter grade. b) 1. Review credit reports annually: - The three nationwide credit bureaus — Equifax, Experian, and TransUnion — must provide Tomi with a free copy of her credit report once a year. The website AnnualCreditReport.com was set up to provide this service conveniently. It has a toll-free phone number and an address for ordering free reports. - But Tomi must also beware of credit report scams. Many websites claim to offer free credit scores or reports. In some cases, these are scams that make you pay after a trial period or direct you to a site that attempts to collect your personal information. Tomi must make sure that any website she uses to access her credit information is reputable. 2. Dispute errors in reporting: Credit reporting companies and lenders are responsible for correcting errors in credit reports. When Tomi finds an error in her credit report, she explains to the credit reporting company, in writing, which information is inaccurate. Credit bureaus are required by law to investigate — usually within 30 days. If they determine that Tomi's claim is true, they must inform the provider of the information, and that party must make efforts to correct it anywhere they may have reported it. Tomi will also receive written results of the credit reporting company's investigation. 3. Consider security freezes: - If Tomi wants to limit access to her credit history she can use a security, or credit, freeze. A security freeze is a free tool lets you restrict access to your credit report. It can also be used if you are a victim of identity theft. - Freezing and unfreezing access to your credit report is free, and it will not affect your credit score. It also does not restrict you from applying for a job, renting an apartment, or purchasing insurance. If you wish to unfreeze your report, the credit bureau must lift the freeze within one hour of receiving your request.

U2: What is the value of investing in bonds? What are the 3 main types of bonds? What are the PROS & CONS of bonds?

a) - Bonds are popular for income investment, but they can be complex. Different bonds offer different types of yield, and how much return you see may depend on the risk profile of the borrower and the maturity of the bond. - The longer the term of a bond, the more prone it is to downturns in the market. This is why most investors choose shorter-term bonds of five to eight years. High-yield bonds tend to be short term, paying high interest over a limited term of a few years, but they are also high in risk. - Government-secured bonds, however, tend to be safe investments. b) 1. Corporate bonds generally offer higher interest rates than other types of bonds. This is because there is a greater risk of investing in a company that might not be able to pay you back. Investment-grade bonds are issued by companies with excellent credit ratings. High-yield bonds — formerly called junk bonds — are also considered high risk. 2. Municipal bonds are issued by states and cities to finance public projects. They have the advantage of being nontaxable, but they offer a lower rate of return than corporate bonds. 3. U.S. Treasury bonds, or government bonds, are issued by the federal government. Since you can be confident that the bond will be paid back, treasury bonds offer the lowest bond interest rates. They also offer the lowest risk, so they are a wise choice if you can't afford to lose on your investment. c) PROS: - Bonds tend to be relatively safe investments, particularly for retirees or people who can't afford to lose any of their savings. Bonds tend to rise and fall less dramatically than stocks. - Some types of bonds pay investors periodic interest income, often a fixed amount twice a year. - Municipal bonds are a positive way to help improve your community. For example, the money you invest may help build a new hospital or park. CONS: - Bonds typically offer a lower long-term rate of return than stocks, and they tend to lock up your money for long periods. - If the issuer of the bond decides to issue new bonds at a higher interest rate, it will be hard to sell your lower-interest bond. It is also possible that the issuer will default — fail to pay the interest or principal. You could lose money, especially on a company with a poor rating.

U2: What does building an investment portfolio involve? What type of person might find stocks to be a good investment choice for them? What is the value of stocks? What are the 2 types of stocks?

a) - Building an investment portfolio involves identifying an investment strategy and conducting research. - It also involves understanding the level of risk you are willing to take with you investments. b) People who can tolerate a high level of risk may find stocks to be a good choice for them. Stocks often outperform other types of investments. c) - Stocks are traded on markets. Their value changes as market forces and investor perceptions cause the trade price of the stocks to change. When shares in a stock increase in value, this is known as a capital gain. - Stocks can pay investors a dividend, or a share of the profits. If you buy shares in a stock at a low price and sell them at a high price, that's also a way to make money from stocks. d) 1. A dividend stock gives investors shares of the annual profit of a company. In addition to earning an annual dividend payment, your stocks may also grow in value so you can make additional money from selling them later. 2. A preferred stock is a cross between a stock and a bond that can offer a high rate of return. Like other stocks, preferred stocks are open to market changes, but they offer a little more stability than typical stocks. They are less stable than typical bonds, however, and they can be difficult to purchase.

U3: What is Credit? What are loans? What is Debt?

a) - Credit is an agreement between a lender and a borrower. The lender provides a sum of money that the borrower agrees to repay over time, with interest. - Credit comes in many forms, but perhaps the most common is the credit card. Credit cards are lines of credit issued by banks or businesses that allow cardholders to purchase goods or services in the present, but pay for those goods or services over time. b) A loan is a sum of money borrowed that is expected to be paid back. Loans allow individuals and businesses to buy goods that require more money than they have available. The money is paid back over time, along with interest. The specific terms and interest rates for loans vary, but no matter the kind of loan, being a responsible borrower is important. c) - Debt is the amount of cash that a person or business owes. Debt is used by individuals and businesses to make purchases that they could not afford otherwise. - Any time you take out a loan or hold a balance on your credit card, you are accumulating debt.

U3: What are credit protection laws? Who enforces them? What are the 4 credit protection laws that are important for you to understand if you use credit or plan to use it in the future?

a) - Credit protection laws are laws developed to protect consumers who use credit to make purchases. - All consumers of credit have rights guaranteed by credit protection laws. These laws are enforced by the Federal Trade Commission, a federal agency that protects consumers from unfair or deceptive practices. b) 1. The Equal Credit Opportunity Act: The Equal Credit Opportunity Act prohibits discrimination based on race, gender, religion, or age. It also prohibits lenders from discriminating against people on public assistance. 2. The Fair Credit Reporting Act: The Fair Credit Reporting Act requires credit bureaus to maintain accurate reporting of your credit. It protects the private information they collect from anyone who does not have a specific purpose for obtaining it. - Companies that provide your information also have legal obligations to investigate information you dispute. 3. The Fair Debt Collection Practices Act: The Fair Debt Collection Practices Act governs practices by third-party debt collectors. Specifically, it prohibits them from using unreasonable means to obtain repayment of debt, such as calling you late at night or using harassing techniques. 4. The Truth in Lending Act: The Truth in Lending Act requires credit card companies to be truthful in regard to fees and interest charged, as well as how long it will take you to repay your debt if you only pay the minimum payment due each month.

U5: What factors influence a citizen's ability to qualify for student aid? Other than the federal government, what else can provide financial aid?

a) - Financial Need - Citizenship - Selective Service - Acceptance - Academic progress b) - States (Many states offer grant programs for higher education) - Schools (you can be eligible for a scholarship even if you don't qualify for federal or state grants) - Private organizations (Many organizations and private foundations offer scholarships, often based on academic achievement. However, private scholarships make up only a small percentage of total financial aid.) - Military The military is another important source of financial aid, including scholarships. The U.S. Armed Forces covers some educational costs for people currently serving in the military, people who have served, or people who intend to serve after receiving a degree or certificate. Plans include the Montgomery GI Bill & the Post-911 GI Bill

U4: What is group policy? How is it used? What are the 3 main components of health insurance policies?

a) - Group policy is a contract for insurance that extends to a group of people, such as employees. - An insurance policy can be purchased from an insurance company. Some people join an existing group policy through their employer. In these policies, the insurance company agrees to protect you against certain kinds of costs. b) 1. Premium: - The amount of money you will pay to maintain an insurance policy is called the premium. This cost can vary. - Under law, health care companies can only consider five factors when setting premium costs: your age, whether you smoke tobacco, who else is covered in the plan, where you live, and the category of the plan you want to join. - If you want your policy to cover almost all the costs of healthcare, you will pay a higher premium. 2. Copayments: - The amount you will have to pay each time you visit a health care provider or pick up a prescription is called a copayment or a copay. A copay is typically a fixed amount and is one example of an out-of-pocket health care cost. - For example, you might have a copay of $25 for a doctor's visit. Your insurance will pay the rest. Generally the copay for a regular doctor's appointment will be less than a copay for a medical specialist. Your copayment for a visit to the emergency room might be several hundred dollars. 3. Deducible: - Many insurance plans have a maximum out-of-pocket cost you can pay each year. This is called a deductible. Let's say your deductible is $5,000 and you get a hospital bill for $100,000. The most you would have to pay is $5,000. - Health insurance deductibles are different than other types of insurance deductibles you will learn about. You don't have to spend $5,000 out-of-pocket before your health care benefits start. Health insurance covers some of your health care expenses right away.

U2: What are some questions you should ask yourself when deciding how to invest your money? What is an income investment strategy? What are the 4 steps to refocus your portfolio in order to generate more income? What is an individual retirement account(IRA)?

a) - How accessible, or liquid, do you want your money to be? - How long can I let this investment grow? - When do I need to use the money earned? - How much risk are you willing to tolerate for a higher rate of return? b) A financial strategy that involves putting together a portfolio of investment assets to generate income. c) 1. Identify your financial goals 2. Protect your savings 3. Diversify your investments 4. Consider investing in additional types of assets d) (IRA) An investment tool with certain tax advantages that encourage long-term savings and investment, usually for retirement.

U4: Why should a young person consider a life insurance policy? What are the 2 main types of life insurance?

a) - Life insurance pays money to the people you select, if you die. It can help those people cope with financial costs they may have to face in a worst-case scenario. - For example, your family might take out school loans for your education in their own names. If you were to die, they would still have to pay those debts. - For most young people, life insurance is extremely affordable b) 1. Whole life insurance: - Whole life insurance is a permanent policy that remains active until you pass away. It has a fixed death benefit, which is the amount it pays when you die. - Whole life insurance is also like a savings account. You can borrow from it, and it might even pay you a dividend. 2. Term life insurance: - Term life insurance is much less expensive than whole life. It lasts for a length of time, or term, and then expires — usually between 5 and 40 years. If you pass away during that term, the policy pays the death benefit. - However, the policy itself has no cash value. Also, once the policy expires, you no longer have life insurance. Buying a new policy will be more expensive because the costs are based on age and health.

U3: How are loans and credit cards similar? What is minimum payment due? What is a grace period? What are late fees?

a) - Loans and credit cards are similar — you have to pay them off! If you don't, you can easily max out your credit limit or start acquiring fees. - Most loans and credit cards require you to make payments each month. When you only pay the minimum amount due, you end up paying a lot more for your purchase over time — often long after the enjoyment of your purchase has passed. b) - People who cannot afford to pay the balance of a credit card or loan agree to pay a certain amount each month. If you pay the minimum payment due on time, you will not be charged a late fee. But you will be charged interest on the money you still owe. - Payment strategies for credit cards and loans can be different. Credit cards tend to have high interest rates, so paying more than the minimum payment due is highly recommended. But loans are a bit different. If you have a loan with a very low interest rate, it may not make sense for you to pay more than the minimum. This is especially true if you also have a credit card with a high interest rate. - If you do decide to pay more than the minimum required for your loan, the extra you pay usually goes to the principal and decreases the amount of interest you will pay overall. c) - Credit cards require you to pay some money each month, at the close of the billing cycle. A billing cycle is the time between billing statements. Billing cycles typically last between 20 and 45 days. - The time between a bill's due date at the end of the billing cycle and the date when a penalty will be charged for late payment is called the grace period. If you pay the balance in full during the grace period, you are not charged a late fee or interest. - Other kinds of loans also may have grace periods. The time frame varies, usually from 2 to 15 days depending on the type of loan and the lender. If you cannot make a payment, the best thing to do is contact the company who manages the loan. They might be able to extend the grace period or renegotiate terms. d) - Creditors charge late fees if your payment reaches them after the grace period. Late fees add up quickly. They also can affect your credit score(A number that is assigned to a person to help judge his or her ability to repay a loan). - If you are late repeatedly, you will be unable to get the best loan rates in the future. You might not even be eligible for a loan. For these reasons, it is best to always pay your credit cards and loans on time.

U3: How do loans with longer terms compare to loans with shorter terms? What factors influence the true cost of a loan?

a) - Loans with longer terms have smaller monthly payments but larger amounts of interest accrued. - Loans with shorter terms have larger monthly payments but smaller amounts of accrued interest. b) - original loan amount - the interest that accrues over the term of the loan, - fees — including late fees. Examples: - Matt's concert tickets cost $180 at face value. But by putting them on his credit card and paying them off over six months, he paid an extra $10 in interest. - The camera's original cost was $600. But Matt put it on his credit card and made a $30 minimum monthly payment. It took two years to pay for the camera, and he paid another $135 in interest — $735 for his $600 purchase.

U3: What is a secured loan? How do their interest rates & repayment terms compare to those of unsecured loans? What are some examples of secured loans? What is an unsecured loan? How do their interest rates & repayment terms compare to those of secured loans? What are some examples of unsecured loans?

a) - Most people use secured loans backed by collateral when borrowing large sums of money. Lenders require collateral for these loans to ensure the debt will be repaid. - Secured loans generally have lower interest rates and longer repayment terms than unsecured loans. - Secured loans are commonly used to buy cars or homes. b) - Unsecured loans include student loans, personal loans, and credit cards. - Because borrowers are not required to provide collateral, lenders are taking more of a risk. - - As a result, interest rates are typically higher on unsecured loans.

U4: How do you decide how much life insurance you need?

a) - People can shop for different types of insurance depending on the risks and losses they want to protect themselves against - You are not required by law to carry life insurance. However, life insurance can help protect your loved ones in case something unthinkable happens to your. - Factors like age, health, & habits can influence the cost of life insurance(e.g. an old person who smokes a lot would have more expensive life insurance)

U4: What are the benefits of public health insurance? Who runs public health programs? What is a subsidy? What did the Affordable Care Act do? What are Medicaid and CHIP What is Medicare?

a) - Public health insurance provides a safety net for people who can't afford private health insurance. - Government insurance programs provide financial support, or subsidy, to people in need. - Individuals may have lost income due to illness, disability, or unemployment. These subsidies can pay for all or some of the costs of health care. b) Some public programs are run by both state and federal governments. Others are run by the federal government alone. c) A benefit given to remove a burden. d) Under the provisions of the Affordable Care Act, the federal government offers subsidies to help make health insurance affordable for all Americans. People who don't receive health insurance from an employer can enroll in a government-sponsored plan online. The federal Health Insurance Marketplace is designed to encourage competition and create lower costs for consumers. e) - Medicaid is both a federal and state-run program that provides health coverage to low-income Americans. - The Children's Health Insurance Program (CHIP) is a program that provides low-cost health coverage to children in families that earn too much to be eligible for Medicaid. CHIP benefits are different in each state. f) Medicare is a federal health insurance program for people 65 or older and for people with disabilities. Hospital insurance is included free of charge. However, people may pay a monthly premium for routine care and prescription drug coverage.

U5: What are reasons for attending colleges or universities? What do you earn when you complete a program at a four-year college? What fields are in demand? On average, will you earn more money with a bachelor's degree or with a two-year associate degree or a trade school diploma? How much do people with bachelor's degrees earn compared to people with high school diplomas?

a) - Some professions are only possible if you have a college degree - Many students also choose college for the broad education, networking connections, or the social experience b) You earn a bachelor's degree c) STEM d) On average, you are likely to make more money with a bachelor's degree than with a two-year associate degree or a trade school diploma. e) The median lifetime earnings for men with bachelor's degrees are $900,000 more than male high school graduates. Women with bachelor's degrees earn $630,000 more than female high school graduates

U3: What is the main federal law that protects the debtor from lenders/creditors who might take extreme measures to collect debts? What does the FDCPA cover? What does it not cover? What practices does FDCPA outlaw?

a) - The Fair Debt Collection Practices Act (FDCPA) is a federal law that was established to prohibit harassment — improper communication — by debt collectors. - Each state also has its own laws that protect you from extreme collection tactics. b) - The FDCPA covers the collection of mortgages, credit cards, medical debts, and other debts for personal, family, or household purposes. - It does not cover business debts c) - harassment - lying - contacting people before 8 a.m. or after 9 p.m. - also gives debtors the right to verify the amount of debt they owe

U4: What risks are associated with being underinsured?

a) - The cost of a mishap may exceed your limit of liability(if you just payed the minimum amount for liability coverage) - W/o say, collision insurance, you wouldn't be able to get your car repaired in the event of an accident Examples: - When Brendan bought car insurance, he selected the minimum amount of liability coverage required by law. Then Brendan got in a bad car accident. Because his limit of liability was so low, Brendan ended up paying a lot out of pocket. - If you own a dog, you are liable if the dog bites a person. - If you own a car, you are liable if the car rolls down a hill on its own and damages someone's property.

U2: What investment strategy is recommended for saving for retirement? What are the 4 main retirement programs? What is Social Security? How does it work? What is 401(k) Plan? What is a Pension Plan? What is IRA? How is it different from 401(k)?

a) - There are many different strategies for saving for retirement. You could invest in stocks, take out government bonds, or invest in a mutual fund. - But most financial advisors will tell you that it's best to take out separate accounts just for retirement. This is because retirement accounts often have tax advantages that other types of savings accounts or investments do not have. b) 1. Social Security 2. 401(k) 3. Pension Plan 4. IRA c) - Social Security is an assistance program provided by the federal government. The program's purpose is to provide financial protection for millions of U.S citizens, including retirees and people with disabilities. - When you work, your employer takes money from your paycheck to pay taxes. Some of these taxes go toward Social Security. At the age of retirement established by the Social Security Administration, you can then receive monthly Social Security payments. d) - Many employers offer retirement plans to their employees. Common types of employer-based plans include 401(k) plans, pension plans, and 403(b) plans. Employers often offer matching funds, up to a certain amount, as an additional benefit with these accounts. - A 401(k) is a defined-contribution plan, which means the income you draw from the plan in retirement will vary depending on how much you contributed. 401(k)s are named after a section of the Internal Revenue Code. - Employees with 401(k) plans can opt to have money withheld from their paychecks before taxes are due. This reduces their taxable income. Additionally, the money they invest in the 401(k) is tax-deferred — they will not pay taxes on that money until they withdraw it for retirement. e) - A pension plan, also called a defined-benefit plan, is an employer-sponsored retirement plan funded by contributions of employers and employees. Often, the employer is required to make contributions to a pool of money set aside for workers upon retirement. Funds are invested on the employees' behalf. Some employers allow employees to also make voluntary payments into their pension plans. - Pension plans are called defined-benefit plans because they promise employees a certain amount of money upon retirement, called a pension. This amount is calculated using a formula that factors in age, salary, and years of employment. f) - Unlike a 401(k) or a pension plan, an individual retirement account (IRA) is not a benefit offered by an employer. Instead, IRAs are set up by individual taxpayers, small-business owners, and self-employed individuals. There are several types of IRAs, each with different rules about who is eligible to contribute to them. They also have different rules about taxes and withdrawals. - Money invested in IRAs is usually tax-deferred, which means you don't pay taxes on your investments until you withdraw them for retirement. It also means there are often penalties for withdrawing the money you invest before retirement age. Like a 401(k), an IRA is a defined-contribution plan — the monthly income from your IRA will be higher if you make the maximum annual contribution allowed by the government.

U2: What are the three rules of wealth building? What is key when investing?

a) - Use compound interest to your advantage - Invest for the long term - Diversify b) When it comes to investing, time is the key. Starting to invest early gives your money more time to work for you. In other words, it gives you more time to build wealth.

U2: What activities may people look forward to in retirement? What expenses continue to be financial costs during retirement?

a) - Volunteering - Travel - Hobbies & sports - Time with loved ones b) 1. Living expenses: Living expenses, such as food and housing, generally account for about 50 percent of your budget. These expenses continue after you retire. A large percentage of Americans in their 60s still have a mortgage when they retire. 2. Mortgage: 3. Health care: The average U.S. retiree household spends thousands of dollars a year on health care. Even with Medicare covering many medical costs, your retirement savings should include money for heath expenses. As people age, the costs of medical care, prescription drugs, and other health care expenses often increase. 4. Long-term care: With Americans living longer, many people eventually need help with daily living tasks, such as eating, bathing, and dressing. Some rely on spouses or children, but more than a third require professional in-home help, an assisted living facility, or a nursing home where care is available at all hours of the day. Such care is costly, more than $100,000 a year in most cases.

U1: What are the benefits of keeping your money in a financial institution like a bank or credit union? What are some reasons people use financial institutions?

a) - Your money is safe, and you can access it easily. - The government protects your deposits through the Federal Deposit Insurance Corporation (FDIC) b) - More convenient: Your employer deposits your pay directly into your account, and when you need to pay a bill, you just write a check or pay it online - You can also check your account online which can help you keep track of your money - You can shop online & use digital payments

U3: What factors decide whether you should choose a loan with a fixed interest rate or one with a variable interest rate? What are personal loans? In what situations is a variable rate or fixed rate better? What are student loans? Is a variable rate or fixed rate better? What are mortgages? Is a variable rate or fixed rate better?

a) - the length of the loan - the interest rate offered - the purpose of the loan b) - You might need a personal loan to recover from an emergency or large debt. Whether you should look for a fixed rate or a variable rate depends in large part on when you plan to pay off the loan. - A loan with a variable rate might offer an affordable way to quickly pay off debt. But if the loan is needed for more than a few years, a fixed rate is probably a better option. c) - Most students finance their education with fixed-rate federal loans. Because federal student loans are not based on the borrower's credit score, they are a good choice for students with limited credit history. - You might choose to refinance after graduation to get a loan at a lower variable rate. Many people also consolidate their loans at a single rate. This makes it a little easier to keep track of payments. d) - When interest rates for mortgages are low, locking in a 30-year fixed rate makes financial sense. - If a homebuyer plans to stay in a new home for just a few years, however, an adjustable-rate mortgage might be a better option. This is because adjustable-rate mortgages generally offer lower rates at the beginning of the loan term. - When you buy a home, even a minor difference in the interest rate can add up to tens of thousands of dollars.

U2: What are the 2 categories that employer-based retirement plans fall into? What type of employees fall in each category?

a) 1. Defined-benefit plans: - Most public employees are covered by defined-benefit plans - In a defined-benefit plan — or a traditional pension plan — an employer guarantees that the employee receives a predetermined amount of money upon retirement. The dollar amount is usually determined by a formula based on an employee's number of years of service and earnings. These types of plans are particularly common for public-sector employees, such as teachers, police officers, and firefighters. 2. Defined-contribution plans: - Many nonprofit organization, like food banks or charities, offer defined-contribution 403(b) plans to their employees - Common examples of defined-contribution plans include 401(k) plans and 403(b) plans. A 403(b) is a retirement plan for certain employees in public schools and nonprofit organizations. It has many of the same tax advantages as a 401(k), including deferring tax payments until retirement. - In a defined-contribution plan, employees and employers can contribute and invest funds. Although it is not required, many employers match the contributions employees make to these plans. The amount of money a worker receives upon retiring depends on how well the defined-contribution plan does. In other words, there is not a predetermined benefit amount like there is with a defined-benefit plan.

U4: What are the 3 types of managed care plans? What are the PROS and CONS of each managed care plan?

a) 1. HMO: - A Health Maintenance Organization (HMO) usually pays for care only within its network of doctors and facilities, except in emergencies. To see a specialist, you need a referral from your primary care physician. - You may be required to live or work in a certain geographical area to be eligible for coverage by an HMO. An HMO will often emphasize preventive care using health screenings and patient education. 2. PPO: - A Preferred Provider Organization (PPO) also features a network of doctors and services, with fewer restrictions. You can go outside the network for a higher fee. - PPOs may offer you more flexibility, but they can cost more if you go outside the plan's network. Premiums tend to be higher, and so are deductibles. 3. POS: - A Point-of-Service (POS) plan combines features of an HMO and a PPO. - First you choose an in-network doctor as your primary care provider. You can see a different doctor, but you will pay more unless your primary care doctor makes a referral. Then your plan will pay for the visit. - This plan can be good if you live in a rural area with few HMO choices or if you travel a lot. b) 1. HMO PROS: - Most affordable in-network services CONS - No out-of-network services 2. PPO PROS: - Affordable in-network services - Expensive out-of-network services 3. POS: PROS: - Combines benefits of HMO and PPO CONS: - Primary Care Doctor required

U1: What does a budget table look like? What is discretionary income?

a) A budget table usually has two sections — a section for income and a section for expenses, with totals for each category. b) The amount of money that is left over for spending or saving from all income after accounting for taxes and necessities.

U5: What is an academic major? How much will a college graduate make, on average, compared to a high school graduate per year? How much will a person with a high school diploma, on average, compared to a person without a high school diploma, per year?

a) A course of study in a college or university student's area of specialization. b) A college graduate will make, on average, 55 percent more than a high school graduate per year c) A person with a high school diploma will tend to earn more than a person without a high school diploma

U3: What is a fixed interest rate? What is a variable interest rate? What are the differences between fixed rate loans and variable rate loans?

a) A loan with a fixed interest rate has an interest rate that cannot be changed w/o a new agreement between the lender & borrower b) A variable interest rate is an interest rate that changes over time, usually in response to an underlying benchmark or index. c) Fixed-rate loans: - No interest rate increase - Predictable payments - Higher interest rate Variable rate loans: - Lower initial interest rate - Can increase rate based on markets - May cost more across loan term

U2: What is diversification? How does diversification work? How is it different from asset allocation? What 4 questions should you answer when choosing how you're going to diversify your portfolio?

a) A method of managing investment risk by mixing the types of investments in order to provide the highest possible return for the lowest risk. b) A diversified investment portfolio goes a step beyond asset allocation. It not only allocates investments among different asset types — stocks, bonds, and so forth — but it also spreads out your investments within those types between assets with different levels of risk and return. c) 1. "How much do you want to earn?": If you want to see a high return, for example, then you won't choose mainly cash investments. You'll choose riskier stocks, mutual funds, high-yield bonds, and other investments that have a higher possible rate of return. 2. "What is your time frame?": If you are 20 years old and are planning for retirement, for example, you'll be looking at a long time frame. You can invest in more aggressive 401(k)s or IRAs. As you age and get closer to retirement, you will likely want to adjust your investments in those accounts, switching to stocks or bonds that are lower in risk. 3. "How much risk do you want to take?": If you are 20 years old and are planning for retirement, for example, you'll be looking at a long time frame. You can invest in more aggressive 401(k)s or IRAs. As you age and get closer to retirement, you will likely want to adjust your investments in those accounts, switching to stocks or bonds that are lower in risk. 4. "Are there other considerations?": Diversification can be expensive if you have to juggle losses and fees. At some point, diversified portfolios can also become difficult to manage. You need to decide how much complexity you are willing to take on. You may also decide to put a cap on how much money you're willing to invest.

U1: What is a paycheck? How is your paycheck different from a check you write? What is a paystub? What is gross income? What are payroll deductions? What is net income?

a) A paycheck shows the income you received for the pay period or number of hours you worked. It includes the name of your employer and the name of their bank. Unlike a check you write, your paycheck will likely be computer generated. b) A pay stub shows your net and gross earnings and all payroll deductions. Deductions can include taxes, your share of employee benefits such as insurance, your contributions toward retirement or savings accounts, and charitable donations you have elected to make through your paycheck. c) Your gross income is the total amount you earn as a salary or hourly wage for a given time frame. d) A payroll deduction is any money your employer has taken from your paycheck. Payroll deductions can include payments to retirement accounts or money withheld for taxes. e) Your net income is the amount left after your employer subtracts payroll deductions like taxes and benefit costs. Net income is also called take-home pay since it's the actual amount you will receive in your check.

U3: What is a credit report? How often are you entitled to a free copy of your credit report? What should you do once you obtain your credit report?

a) A report that includes an individual's credit score and all pertinent information impacting that score. b) You're entitled to a free copy of your credit report every 12 months from each of three national credit bureaus c) You should carefully review each section for accuracy: 1. Section on personal information: In the first section of most credit reports, you will find your name and any name you used in the past in connection with a credit account. Check this information for accuracy. Also check your address, Social Security number, phone numbers, and birth date. If you see an error, contact the credit reporting company to have it updated. 2. Section describing credit history: - The next section of a credit report usually contains a list of current and past credit accounts, the current credit limit for each account, and the amount still owed on each one. This part will also show the date each account was opened and your detailed payment history. - Derogatory, or negative, remarks on your credit report usually indicate that you failed to make a payment on time or pay back a loan. These remarks can be long-lasting. - If there is an error, you should contact the credit reporting company and the lender and make every effort to have it corrected. 3. Section including legal notices and credit inquiries: - Another section of a credit report includes information about any financial problems that have led to legal action. This might include bankruptcies or foreclosures. - This section will also include information about whether your credit report has been recently accessed or reviewed. This includes inquiries made by lenders checking your credit. Too many inquiries can actually lower your credit score. This alerts lenders that something might be happening in your life that is causing you to borrow a lot of money.

U4: What is an umbrella policy? When should you consider it? When does it kick in? What are 3 examples of how umbrella policy can benefit you?

a) A type of insurance that covers claims in excess of regular insurance policy coverage. b) Let's say you have a big family, several cars, and teenage drivers living with you. You might consider an umbrella insurance policy. c) This type of insurance only kicks in when you reach the liability on all your other policies. It is a low-cost policy that can save you thousands or even a millions of dollars. d) 1. Injury to others: Imagine you are at fault in a car accident and the other driver's medical bills total $75,000. But your auto insurance policy only covers $50,000. Umbrella insurance will pay the remaining $25,000. Without the umbrella policy, you would have to pay the extra $25,000 yourself. 2. Damage to property: A tree growing on your property falls and crushes the neighbor's roof. Your homeowners insurance covers up to $25,000, but the neighbor sues you for $50,000. An umbrella policy will pay the difference and would also pay any of your legal costs in the lawsuit. 3. Lawsuits and claims: Umbrella insurance can cover certain types of lawsuits. When someone sues you, they want you to pay for damages they believe you caused. Your regular liability coverage might pay for claims up to your limit of liability. But what if you are sued for much more — say a million dollars? Umbrella insurance could cover that too.

U2: What does tax-deferred mean? What are the 3 benefits of tax-deferred savings?

a) A type of investment earnings that are not taxed until the investor begins using the money. b) 1. You won't pay taxes on your investment until it is withdrawn 2. By contributing pretax, you will have more money to invest 3. Starting early will make the most of your tax-deferred contributions

U1: What is a regressive tax? What is a progressive tax?

a) A type of taxation that requires all people to pay the same amount, regardless of income. b) A type of taxation in which the rate people pay is based on their income. The higher someone's income, the higher that person's tax rate.

U2: What is inflation? What is interest on a savings account? What happens after you deposit money in a savings account?

a) An increase in prices combined with a fall in the value of money. b) Interest on a savings account is money a bank or financial institution pays you for holding your money. c) 1. It will be in a safe place. Nearly all banks are insured by the federal government for deposit accounts up to $250,000 2. You will earn money from the bank if you leave it in an interest-bearing account 3. When you put your money in a savings account, it doesn't just sit in a vault. The bank has the right to lend a portion of your money to other people. The borrowers must pay back those loans with interest. The bank makes money by lending money and shares some of that interest with you. 4. The bank shares part of the interest it earns with you, so you earn money on your deposit 5. The larger the deposit and the longer you leave your money untouched, the more interest it will earn for the bank and for you.

U3: What is an insurance policy? What is its purpose? What does the declarations page have? What is a Premium? What is a Policy Limit? What is a Deductible? What are Exclusions?

a) An insurance policy describes the terms and conditions of your contract with the insurance company. b) The declarations page summarizes the key points about your policy: - It shows the type of coverage you have - the people or property that are covered under the policy. - It will also include the policy number, period of coverage, and premium. c) - The premium is the price of an insurance policy. It is determined by the insurance company based on your risk profile. - An older person with a history of illness will pay more for health insurance than a young, healthy person. If you have a new car and a history of reckless driving, you'll pay more than a driver who has no tickets and drives an old car. d) - The policy limit is the maximum amount an insurer will pay for a covered loss. It is also called the limit of liability(The maximum amount an insurer will pay for a covered loss.). Some types of insurance might have a maximum payout per year, while others might have a maximum per event. - For property insurance, the policy limit will vary depending on the value of the property. e. - The deductible is the amount you are expected to pay before the insurance company starts to pay. It is also called an out-of-pocket expense. If you have a $500 deductible on automobile collision insurance but the cost of your repair bill is $1,000, you will have to pay the first $500. Your insurance company will pay the remaining $500. - You can lower your premium by paying a higher deductible. f. - Your insurance policy will also explain what is not covered, called an exclusion. In the case of homeowners insurance, damage from natural disasters is often excluded, including floods. If you live in a flood-prone area, you may have to purchase flood insurance to cover what is excluded in your policy. - Some car insurance policies exclude vandalism and theft. You would need to purchase this coverage separately.

U3: What is credit counseling? What are 4 strategies that a credit counselor can recommend or do?

a) Assistance provided to people who are having difficulty managing debt. b) 1. Create a debt management plan: - A credit counselor can advise you on how to create a plan to help you manage debt through consolidation or by setting up payment plans. A counselor could also set up a debt management plan (DMP) and manage it on your behalf. - A DMP requires the debtor to make a single monthly payment to a counseling agency, which will then distribute the money to his or her creditors. Counseling agencies are sometimes able to negotiate better terms if the debtor is under a DMP. 2. Develop a budget: Counselors analyze expenses and income and help you determine how much you can afford to spend each month on various wants and needs. They can help steer you toward better spending habits by setting up a smart, realistic budget. 3. Speak to your creditors A credit counselor can speak with your creditors and negotiate on your behalf. Counselors are experienced and are more skilled at negotiating than those who don't have the same background. Although you will need to pay a credit counselor for their services, in the long run you might save more money. 4. Review educational materials and attend workshops: There's a great deal to learn about how to best manage your finances and debt. Knowing where to start can be overwhelming, but a credit counselor can point you in the right direction. They might provide educational materials such as budget guidelines and suggest helpful workshops on money management and spending tips.

U3: What lenders are reliable? What lenders are less reliable? What are the benefits & drawbacks of Banks and credit unions? What are the benefits & drawbacks of Payday lenders? What are the benefits & drawbacks of Title lenders?

a) Banks and credit unions are reliable lenders, while payday or title lenders can be less safe. b) Banks, credit unions, and other financial institutions offer loans. When you're looking for a loan of any kind, check all your options. Online banks may offer lower rates than your local bank. Credit unions sometimes offer even better rates. c) Payday loans are a type of short-term borrowing. Payday lenders are for-profit businesses that offer loans at high interest rates to people who might be unable to get a loan from a bank or credit union. These lenders typically require you to show proof of employment and pay the loan back when you receive your next paycheck. Some states view payday lenders as predatory and have banned payday lenders. d) Title lenders offer another option for short-term loans. As with payday loans, title loans charge high interest rates to borrowers. This type of loan is secured; usually, borrowers give the lender the title to their car or other property as collateral. If you cannot pay off the loan, the lender takes ownership of the property used as collateral.

U2: Who does the bank pay interest to? How is interest expressed? What are the two kinds of interest(w/ examples)?

a) Banks pay interest to everyone who puts money into a savings account, a CD, or a money market account b) Interest is usually expressed as a percentage c) 1. Simple interest: Money paid only on the principal, which is the amount of money you put in your account. 2. Compound interest: Money paid on the amount of money you put in the bank plus any interest you've already earned. Example: Suppose you have $100 and you put it into a bank account with a 1% interest rate. How much interest will you earn each month? Answer: - In an account using a simple interest calculation, your account will earn $1 a month in interest. After two months you will have earned $2 in total interest. - In an account using a compound interest calculation, you will earn $1 in interest in the first month and $1.01 in interest in the second month. This is because the interest you earn is added back to your principal.

U2: Why is it important to research your investment options? How does one research investment options? What is quantitative research? What is a prospectus? What is qualitative research? What questions should you be asking What are other reasons for investing? What is ethical investing?

a) Building a successful investment portfolio takes time and careful consideration. In addition to deciding what investment strategy makes sense for your financial goals, you should spend time researching your investment options. b) Researching investment options involves examining both quantitative and qualitative data. It also involves looking beyond the data and considering the broader financial market. c) - Jill decided that she really wanted to invest in companies that were on the cutting edge of the technology industry. - She started her research by looking at all the quantitative data she could find. Which companies were doing well? To find out, she looked online for different companies' financial statements. - One type of financial document that Jill found particularly useful was a prospectus. A prospectus describes a company's financial track record, including its revenue, net worth, and other useful information. These numbers gave Jill insight into the earning potential of each company. She used this information to decide which companies were worth investing in. d) - If numbers could tell you everything about an investment, then all you would need to invest successfully would be a calculator. But the numbers don't tell you everything you need to know to make a good investment. That's why Jill didn't stop her research after looking at the quantitative data — she also looked for sources of qualitative information. - Jill asked questions like, Does the company have a CEO with vision? Is it expanding its operations? Does it have a good marketing strategy? Are people talking about its products? Jill also considered the broader financial context of the companies she was researching. How do these companies compare to one another? Who are their competitors? What broader industry trends might affect their longer-term success? - The answers to these questions gave Jill valuable clues about whether the companies she was researching were headed in the right direction. e) You may consider practicing ethical investing f) Investing in companies and industries striving to make a positive impact on society. This can include: 1. Impacts on people - Ethical investing examines the impact of investments on people, both negative and positive. You might consider the labor practices of the companies you invest in. Or you might focus on investments that protect communities. - For example, you could choose to invest locally to help businesses in your community grow, which would create jobs and opportunities for people in need. 2. Impacts on the environment: You can invest ethically to help the environment by investing in efforts to develop sustainable energy, housing, or products. You can also divest — remove your investments — from companies that do not align with your values. Some people choose to divest from fossil fuel companies or companies that practice deforestation or fracking. 3. Impacts on animals: If you are opposed to testing products on animals, you can choose to invest in companies that treat animals humanely. You can also invest in companies that take care to preserve natural habitats for wildlife or that work actively to protect endangered species.

U5: What is an example of a short-term goal? What is an example of a medium-term goal? What is an example of a long-term goal?

a) Buying a car b) Buying an apartment c) Buying a house

U2: How much do employees need to invest with a 401(k) plan? What are the 2 main types of 401(k) plans? How do you pay taxes? What are ways you can maximize your 401(k) funds?

a) Employees can invest as much or as little as they like in these accounts up to a maximum established by the federal government. Many employers match a percentage of employees' total contributions. b) 1. Traditional 401(k) Plans: In a traditional 401(k) plan, the money you invest is tax-deferred 2. Roth 401(k) Plans: With a Roth 401(k), you pay taxes when you make contributions, but you can withdraw funds for retirement tax-free c) 1. Start saving early: The sooner you start saving money in your 401(k), the more your money will grow. Due to compound interest, you can make more money by investing earlier, even if you end up investing less overall. 2. Make the maximum contribution: There is a limit to the allowable amount you can invest in your 401(k) each year. Invest the maximum if you can. The more you invest, the more money you will have when you retire. 3. Take advantage of employer matching: If your employer matches your 401(k) contributions, it is like getting a bonus for saving. To get the most of your match, try to contribute the full amount allowed. The more you contribute to your 401(k), the more money you get from your employer as a match. 4. Diversify your investments: - Different 401(k) plans offer different options for how to invest your money. The key is diversification, or choosing a mix of investments. These might include stocks, bonds, or money market accounts. - Diversification is the best way to minimize risk and maximize return. In general, you can afford a bit more risk when you are young.

U2: How are IRAs different from 401(k) & pension plans? What are the 3 most common types of IRAs?

a) IRAs are different from 401(k)s and pension plans because they are set up by individuals, not employers. b) 1. Traditional IRA: - A traditional IRA allows you to set aside tax-deferred savings for retirement. Anyone can open and make contributions to a traditional IRA, but there is an annual limit. - You usually have to pay a penalty on any money withdrawn before age 59½. Because the savings are tax-deferred, you also may have to pay additional taxes on any money you withdraw early. 2. Roth IRA: - In a Roth IRA, taxes are not deferred. Instead, you invest some part of your net income, and your earnings grow tax-free. Upon retirement, you can withdraw funds from a Roth IRA without paying income taxes. - Like other IRAs, there is usually a limit on how much you can contribute annually to a Roth IRA. 3. SEP IRA: Simplified employee pension (SEP) IRAs are intended for self-employed workers, such as independent contractors, freelancers, and small-business owners. SEP IRAs work much like traditional IRAs. Business owners can set up SEP IRAs for their employees, as well as for themselves. SEP IRAs are usually tax-deferred.

U2: What is capital? What is one way individual people grow their capital & gain more wealth? What is capital formation?

a) In economics, the term capital refers to wealth that a business, country, or person owns in the form of money, real estate, or other assets. That capital can be anything from a few dollars to tens of trillions of dollars. b) One way is through the process of capital formation. c) The process of investing money in order to grow wealth over time.

U3: When does someone declare bankruptcy? What is bankruptcy? What does bankruptcy accomplish? What are the PROS & CONS of bankruptcy?

a) In extreme cases, people who are unable to pay their debts can declare bankruptcy. b) The legal proceeding of a person or a business that has declared an inability to repay debt. The person or business is seeking relief from that debt. c) Bankruptcy is a process in which a debtor is relieved from paying some their debts or has their debts rewritten to be more affordable by order of a court. It is a way for people whose debt burden has become unmanageable to have their debts rewritten or discharged. d) PROS: - Removal of debts - Consolidation of debts CONS: - Filing fees - Loss of property - Lowered credit score

U4: Where do most people get health insurance? What 3 steps should you follow when you are ready to select a health insurance policy? What is the Health Insurance Marketplace?

a) In the United States, most people get health insurance either through their employer or through the government. People can also pay for private insurance on their own. b) 1. Determine if you are eligible for COBRA: - The Consolidated Omnibus Budget Reconciliation Act (COBRA) affects workers who lose or leave a job or experience another life-changing event. It allows them to extend the health insurance coverage that was available at their job. - Qualified individuals may be required to pay the full premium. It extends to the worker and his or her family. The goal of COBRA is to allow people to maintain health insurance during life transitions. - If you were recently employed, you may qualify for COBRA. Before you go looking for other sources of health insurance, first check your COBRA eligibility. 2. Research available health insurance resources: - If your job or school does not offer health insurance or you are not eligible for COBRA, you will need to purchase your own coverage. A good place to browse plans online is the Health Insurance Marketplace. States also have their own marketplace websites that describe your options. And major health insurance companies in your area will also have their own websites you can visit to see what types of coverage are available. - Note that if your parent's health insurance plan covers dependents, you can usually be added to their plan and stay on it until you turn 26 years old. 3. Compare benefits from multiple sources: - When you are comparing health plans, look for a summary of benefits. Each plan should offer doctor visits, preventive care, hospital stays, and prescriptions. Compare premiums, policy limits, deductibles, and copays. - For a managed care plan, make sure your doctors are within the network. Be sure your plan pays for the regular care you need, including prescriptions and specialists. Then decide whether you want more health coverage at higher premiums or less coverage at lower premiums. c) A place where people without health care insurance can find information and purchase health care insurance.

U3: What is Installment credit? What loans does installment credit include? How is installment credit different from revolving credit? How does Installment credit work?

a) Installment credit comes in the form of a loan with a fixed loan amount, fixed payments, and a regular repayment schedule. b) 1. A car loan 2. Mortgages: - A loan on a house is called a mortgage. Few people have enough money to buy a house without taking out a mortgage. Mortgages are usually paid back in monthly payments. Mortgage payments are often a family's largest expense. They are typically paid across 15-year to 30-year periods. - A mortgage is a type of secured loan. The home you are buying is used as collateral to secure the debt. If you fail to make your mortgage payments, the bank may repossess, or take back, your house. 3. Student loans: - Student loans are designed to help pay for postsecondary education, including two-year and four-year colleges, universities, and trade schools. Loans can cover the cost of tuition, books, supplies, and living expenses. If you apply for financial aid, you may be offered loans as part of the school's financial aid package. The amount and terms of the loan will vary. - Before agreeing to a student loan, make sure you know who the lender is and what the terms are. In addition to financial institutions, the federal government offers student loans — often at a lower interest rate than private lenders. - Payment on student loans is deferred while you are in school. Normally, repayment starts six months after graduating or leaving school. 4. Personal loans: - Some people take out personal loans to cover unexpected expenses or to consolidate other loans. Personal loans can be obtained from a bank, credit union, or other type of financial institution. Like other kinds of installment loans, personal loans are paid back in set amounts each month. - A personal loan is an unsecured loan — it does not require specific property to be provided as collateral. Because the loan is unsecured, creditors generally charge a much higher interest rate on personal loans than on mortgages or car loans. Personal loans can be difficult to get without a good credit history. c) Unlike a revolving credit account, with an installment credit account, you borrow a set amount and establish an exact time frame to pay off what you borrowed. The initial amount you borrow is called the principal. You will have to pay off the principal plus any interest that accrues on the loan. d) 1. Eric makes a down payment of 20 percent: - For a large purchase like a car or a house, the buyer is usually required to make a significant down payment. - The larger the down payment, the less Eric will need to finance, or borrow. The cost of the car is $36,000. Eric decides to pay 20 percent of the cost as a down payment, which comes to $7,200. This means Eric will need to take out a loan to finance the remaining $28,800. 2. Eric secures a five-year car loan: - Auto loans are available from car dealerships and other lenders like banks. Interest rates and terms may vary considerably, so it is important to shop around. Most auto loans are for two to seven years. An automobile loan is paid back monthly. - Eric shops around for the best rate and is able to secure a five-year installment loan with a 4.5 percent interest rate. His monthly payment will be $537. 3. Eric makes regular monthly payments: - Eric now has a financial obligation to pay $537 every month on his five-year car loan. It's an important responsibility. Even one late payment can cost Eric money in penalties. If he is late several times in a row, his ability to borrow money in the future may be impacted. - An auto loan is a secured loan. The bank uses the car as collateral to protect the money it loaned. If Eric fails to make his loan payments, the lender can repossess, or take back, his car. 4. When the loan is paid, Eric owns the car: - After 60 months, Eric will have paid $32,220 on his installment loan. $28,800 of that $32,220 was the original principal that he borrowed. The rest — $3,420 — is interest, or the cost of borrowing the money. - After the loan is paid off in full, Eric will own his car. He can continue driving the car, free from car payments. Or he might choose to sell it. However, after five years, the value of the car is about half of the original sticker price.

U4: What is disability insurance? What happens once you purchase disability insurance? What is Long-term disability insurance? What is Short-term disability insurance?

a) Insurance that protects a portion of a policyholder's income if illness or injury prevents them from working. b) When you purchase disability insurance, a portion of your income is replaced when you cannot work. c) - Long-term disability insurance replaces a significant portion of your income if you cannot work for months or even years. This is an important benefit for a head of a household with young children. Experts recommend buying enough coverage to replace at least 50 percent of your current salary. - When you purchase life insurance, you will often be offered a disability policy as well. d) - Short-term disability is a voluntary insurance benefit that is typically paid in full or in part by your employer. The insurance policy will pay between 40-70 percent of your salary for 3-6 months. - Some policies allow people to use short-term disability to take time off after having a baby or to care for a loved one who is ill.

U3: What is the formula for calculating simple interest? How is simple interest different from compound interest? What is the effective rate?

a) Interest = Principal x Rate x Time b) Most credit card providers charge compound interest rather than simple interest. Whereas simple interest is money paid only on the principal of a loan, compound interest is money paid on the principal plus any interest you've already earned. Interest can be compounded yearly, monthly, or even daily! The more frequently it is compounded, the more you will owe. c) Interest paid once compounding is considered.

U3: If you qualify for a credit card or installment loan, should you take it? What are the risks of borrowing?

a) Just because you qualify for a credit card or installment loan doesn't mean you should take it. First, be sure you can pay it back. If you default(To fail to repay a debt) on a loan by failing to keep your promise of payment, your financial future can be adversely affected. b) 1. Credit can make it easy to buy things on impulse 2. Penalties & fees: Financial institutions charge a penalty for late payments. If allowed by the loan agreement, the lender might also increase the interest rate on the loan if you are late. This adds to the burden of your loan and means you will pay more in the long run. 3. Harm to your credit reputation: Missing payments on a credit card or loan will lower your credit score and affect your ability to borrow in the future. You might be able to get credit only at a very high interest rate. Or you might not be able to get a loan at all. 4. Loss of property: - For a secured loan, such as an auto loan or a mortgage, defaulting usually results in the seizure of the property — the collateral — used to secure the loan. Even if you have been making payments on a car for many years, if you stop paying, the creditor can take possession. - Defaulting on an unsecured loan can result in your wages being garnished. This means that part of the money you earn from your job will be taken out to pay back the money you owe.

U2: What is opportunity cost (w/ examples)?

a) Like most people, you have to make a difficult choice when it comes to money: spend now or save for the future. The value of what you give up when you choose between two options is called opportunity cost. Example 1: "I love to travel and definitely want to live in New York City when I graduate high school. In order to do that, I'm going to have to postpone buying a car. My bike will have to do for another year." Example 2: "I bought a small condo, and I hope to pay it off in 15 years. To meet that goal, I'm cutting back on expensive clothing and accessories. I have a good job and three months' salary put aside for emergencies. My company offers a retirement plan, and I'm contributing to it every month. Life is good!"

U2: How does risk relate to the rate of return? Why do you need to balance the reward of investments against their risk?

a) Low risk = Lower rate of return b) High risk = Higher rate of return c) To build capital, you need to balance the reward of investments against their risk. You want to invest your money where it will produce the best return. But you also have to consider how much risk you are willing to take on. Example: Michael, Mei, and Jason are considering three different options for investment: savings accounts, stocks, and mutual funds. Each option has a different level of risk and potential return. A savings account is a safe place to keep your money, for example, but the rate of return is low. Investing in a stock or mutual fund generally brings a higher reward, but also has higher risk.

U2: What percent of your pre-retirement income will you need to live comfortably during retirement? Is Social Security meant to be the only source of income for retirees? What are 3 ways to increase Social Security income?

a) Most financial advisers say you will need about 70 percent of your pre-retirement income to live comfortably during retirement. b) NO! Social Security, which is usually much less than this, was never meant to be the only source of income for retirees. It replaces just a percentage of a worker's income. c) 1. Wait for full retirement age: - You can collect Social Security beginning at 62, but you will receive less money than if you wait until the full retirement age. The full retirement used to be 65, but it has increased because people are living longer. In 2021, the full retirement age for anyone born after 1960 was 67. 2. Work a little longer: - Retirement benefits depend on your earnings. Higher lifetime earnings result in higher Social Security benefits. In other words, the longer you work, the more you get paid. 3. Delay retirement until age 70: - You don't have to collect Social Security at full retirement age. If you can wait until you are 70 years old, your monthly payments will go up as much as 24 percent. Staying healthy and doing work you enjoy can really pay off in later years.

U2: Are most interests calculations today, compound or simple?

a) Most interest calculations today, including savings accounts and credit cards, are compound.

U4: Is everyones' risk tolerance and risk level the same? What is your risk profile?

a) NO! Every individual finds a different level of risk acceptable. Each individual also has their own risk profile. Your risk profile will depend on your age, health, whether you have dependents and the property that you own. b) An analysis of a person's ability to assume risk. c) What are the 5 most common types of risks? 1. Bodily injury: - Accidents that result in bodily injury can happen anywhere, and they frequently do. Falls are the most common form of household accident and can cause concussions and broken bones. Children and older adults are most likely to fall. - You can take steps to avoid certain injuries. You can wear protective gear when doing activities and keep walkways clear. 2. Automobile accidents - Automobile accidents are also frequent and can be severe. More than half of all accidents happen within five miles of home. Car accidents can cause injury as well as property damage. - Safe drivers avoid accidents by obeying traffic laws and speed limits. They also refrain from texting while driving. 3. Illness: - Illnesses can take many forms and vary in their severity and frequency. A long-term illness can result in serious financial hardship. Serious illnesses can lead to expensive medical bills and loss of income. If a family's sole provider becomes sick, they might be unable to pay their mortgage and other expenses. - Some illnesses are unavoidable. But other less severe illnesses can be managed through diet, exercise, and sometimes medication. 4. Fire - Fires are severe risks that have both natural and human causes. Forest fires occur naturally in some parts of the country, usually during droughts. House fires may be caused by faulty electrical wiring or by neglect, such as when someone forgets to turn off a stove. - Risk reduction measures include the proper use of smoke alarms and fire prevention training. 5. Crime, theft, and fraud: - Theft is the most common type of neighborhood crime. But with the rise of the Internet, identity theft is also becoming more common. Identity theft is a form of fraud — an intentional act of deception to gain something unlawfully. - Insurance can't stop crime from occurring, but it can help if you are a victim of crime.

U5: What will a tradesperson need to enter their profession? What are the key considerations if you are thinking about trade school?

a) Once Ulysses decides on his focus, he will need to choose a technical school to get the correct: - certification - license required for his profession b) - Trade schools tend to cost less and take less time than college(many programs run 18-24 months) - Trade schools offer hands-on training in a specific skill - Many trades require job-specific licenses or certifications

U2: Why is real estate another great way to diversify your portfolio & reduce overall investment risk? What are the 4 common types of real estate investments? Is real estate a liquid asset?

a) Real estate has proven to be a very good investment in areas where the cost of housing is increasing. Demand for housing tends to increase as young professionals and new families seek permanent homes. b) 1. Residential properties: To make money from residential real estate investments, you could buy a house or building, renovate it, and sell it for a profit. Or you could rent the rooms or apartments instead of selling. It is possible to make a lot of money this way, but dealing with tenants and maintaining the properties can be costly. You also might have to deal with changing regulations that affect how you can rent your property. And, if you decide that you need to sell your property, it can be difficult to do. Real estate is not a liquid asset. 2. Commercial properties: Commercial real estate is property rented to businesses. Office buildings and shopping malls are examples of commercial real estate. The potential to make money from commercial real estate is huge. But if you have ever seen an empty strip mall, you know the risk is that you might not be able to rent the space. As with residential property, you must also deal with government regulations. 3. Land purchases: When you invest in land, you are simply buying a plot. When you make this type of investment, you hope that developers will want to build on the land, or maybe you intend to build on it yourself. This investment requires a lot of money, and you may not see any return at all if no one wants the land and you can't develop it yourself. 4. Real estate investment trusts(REIT): - Investing in a real estate investment trust (REIT) is a way to invest in publicly traded real estate stocks. This requires less money than other types of real estate investments. - REITs are companies that own or finance real estate across a range of property sectors — residential, commercial, and others. Most REITs trade on major stock exchanges. - REITs offer benefits to investors, like higher liquidity and fewer headaches than owning real estate outright. However, as with any stocks, your investment in a REIT is still subject to market changes.

U2: Why was Social Security created? How does Social Security work? Who recieves Social Security benefits?

a) Social Security Administration was created in 1935 during the great depression to fight poverty among older adults & prevent financial insecurity for retired Americans. Over the years, Social Security has helped cause a decline in poverty among elderly people. b) - The Social Security Administration uses your Social Security number (SSN) to keep track of how much money you earn. As you work and pay taxes, you earn Social Security credits. In 2021, workers received 1 credit for every $1,470 earned, but this amount usually goes up every year. Once you have earned 40 credits by paying into the system for at least 10 years, you are eligible to collect Social Security upon retirement. - Unlike other retirement programs, Social Security isn't held in a personal account for you. Instead, Social Security contributions are pooled in a federal government fund and paid to people currently receiving benefits. c) - Most of the people who receive Social Security benefits are retirees, but Social Security is also used to support people with disabilities. A spouse or child of a worker who died may also be eligible for Social Security. - While Social Security can pay a portion of the costs of retirement, it is not sufficient for most retirees to live on. Most people require additional savings to maintain their lifestyles during retirement.

U4: How does insurance protect society? What are 3 ways that insurance can affect society?

a) Sometimes people do not receive compensation for their losses. Without insurance, house fires or medical bills could lead to bankruptcy, job loss, or even homelessness. These losses can place new burdens on society. In this sense, insurance reduces social burden. b) 1. Insurance and the law: The federal government regulates insurance practices to make sure you are treated fairly. State laws play a role too by making some kinds of insurance mandatory. For example, in most states you must be insured to drive a car. When people comply with such laws, it keeps the cost of insurance lower for everyone and provides mutual protection from loss. 2. Insurance and lending: - The insurance industry makes it easier for you to get a loan by guaranteeing that the lender will get paid if collateral gets destroyed. For example, a home mortgage lender requires you to insure your house so that they will get compensated if it burns down. - Insurance reduces lenders' uncertainty, which makes credit more available. This allows more people to own expensive items like homes or cars. 3. Insurance and the economy: - Insurance means you don't have to set aside a lot of cash for a possible emergency. People who are insured can feel more confident investing and saving for other things. This investing benefits the economy. - Insurance can affect social behavior too. For instance, non-smokers pay less for health insurance than smokers do, and safe drivers generally pay less on car insurance. This contributes to a safer society.

U2: What types of investments usually make up the majority of a successful investment portfolio? How can mutual funds & hedge funds be good for income generation? Are you more likely to get a mutual fund or a hedge fund when starting out investing?

a) Stocks and bonds often make up the majority of a successful investment portfolio. But investors using an asset allocation strategy may also want to consider investing in mutual funds, hedge funds, or real estate. b) 1. Mutual funds: - An investment company creates a portfolio of assets called a mutual fund. It typically includes stocks, bonds, and other securities. - A mutual fund is public and is easy for an ordinary investor to get into. Mutual fund companies make money by charging fees. It is important to research the average rate of return for the fund you are considering investing in. You want to make sure the investment is worthwhile after considering fees and inflation. - You can buy into a fund directly from the mutual fund company, bank, or brokerage firm. 2. Hedge funds: - Hedge funds are private, and they tend to target investors of high net worth who meet certain criteria. In simple terms, experts who run hedge funds seek alternative investments that capitalize on market fluctuations in order to reduce risk for investors. But these investors often use high-risk methods — like investing borrowed money — to achieve large gains. - If you're just starting out investing in financial markets, you're much more likely to be able to get into a mutual fund than a hedge fund. Many hedge funds require a minimum investment of $100,000 or more. Hedge funds also tend to be riskier than mutual funds because the amounts invested are higher.

U1: What is a bank statement? How often do you get a copy of the statement? What are other ways you can access up-to-date statements?

a) The bank sends you a regular statement that summarizes all of his deposits and withdrawals b) You usually get a paper copy of this statement in the mail once a month c) You can also access even more up-to-date statements online.

U3: What is debt consolidation? How do you apply for debt consolidation? How do you use debt consolidation? What are the advantages and disadvantages of debt consolidation?

a) The combination of multiple debts into one payment under better terms. b) - You can apply for debt consolidation through your bank, credit card company, or other lender. - Various kinds of loans can be combined, including student loans and consumer loans. - Although you're taking on debt to pay off debt, the terms on debt consolidation loans are generally better than the terms on your outstanding debt. c) This lets you combine multiple debts into one loan with one monthly payment. The payments are often at a lower interest rate and can be paid over a longer term, resulting in lower monthly payments. d) Advantages: - Debt consolidation can lower the amount you need to pay, both monthly and in total. - Expenses are easier to manage when there is one single monthly payment instead of multiple payments. Disadvantages: - A potential disadvantage is that some debt consolidation plans that lengthen your payment term do not lower interest rates. In this circumstance, you could pay more money in the long term, even though your monthly payments are lower.

U1: What is minimum wage? Who sets the minimum wage?

a) The lowest hourly wage that can legally be paid to an employee. b) - The U.S. government sets the federal minimum wage, and employers cannot pay less than that hourly wage. - States can set their own minimum wage, and many states have a minimum that is higher than the federal minimum wage.

U1: What is "living wage"? Is minimum wage always enough to cover the costs of basic needs?

a) The minimum income necessary for a worker to meet his or her basic needs. b) NO! Sometimes the minimum wage is not enough to cover the costs of shelter, utilities, food, and transportation. For example, if you earn $300 per week but your basic costs are $350, you do not earn a living wage.

U2: Why is it important to start retirement planning early? Do people who plan early have more money during retirement?

a) The more you invest and the earlier you start means your retirement savings will have that much more time and potential to grow. b) YES!

U4: What is risk management? Why is risk management important?

a) The process of identifying, assessing, controlling, and mitigating hazards or risks. b) While it is not possible to eliminate all risk in life, it is possible to manage risk. The concept of risk management involves identifying, assessing, controlling, and reducing the impact of negative events.

U4: What is the purpose of insurance? What are the 4 most common types of insurance? Are they optional?

a) The purpose of insurance is to protect you against risk. A risk is any threat or possibility that could have a negative impact on you. b) 1. Health Insurance: Health insurance pays for part of most routine doctor visits. It also covers unexpected costs due to accident or illness. Often it will pay for some of the costs of preventive care. The federal government does not require health insurance, but some states do, and you may pay a penalty if you are uninsured. Regardless, you can be at serious financial risk without it. 2. Homeowners insurance: Homeowners insurance covers damage or loss of your home and belongings. It also protects you if someone gets injured on your property. If you have a mortgage, homeowners insurance is mandatory. If you rent, you can get a similar policy that just covers your belongings. 3. Auto Insurance: Auto insurance covers you if you cause an accident that hurts another person or damages their vehicle or their property. Federal law requires all drivers to have auto insurance. This protects other motorists and pedestrians. 4. Life insurance: Life insurance pays money to family or others you identify in the event of your death. If someone is a dependent — they rely on your income — life insurance can provide security for them. Life insurance is optional.

U2: What is the stock market? What is capital gain? What are the 3 steps to buying stocks?

a) The stock market is where you can buy and sell stocks. b) The amount earned on the sale of an investment. c) 1. Decide how to buy - The easiest way to buy stocks is to go through an online broker. You can also buy stocks directly from a publicly traded company or a full-service broker. - There are a lot of options for online brokers, so make sure you shop around and find the one that works best for you. Look for a user-friendly interface that makes sense to you. 2. Pick your stocks - Once you are set up with a brokerage account, it is time to start researching companies to invest in. Focus on companies you want to be a part of. After all, when you buy a company's stocks, you become a part owner of that company. - Once you've identified a company to invest in, you will have to decide how many shares to buy. As you're getting started, it might be best to buy only a few shares, or even just one share, to get your feet wet. That way, you can get a feel for what you're doing while minimizing your risk. 3. Optimize your portfolio When you've bought some stocks and have a portfolio of investments, you can begin to optimize your investment strategy. This is where asset allocation and diversification come in. Do you want to invest in several market sectors instead of putting everything into just one? Do you want to add bonds or mutual funds to your portfolio of investments? Answering question like these can help you build a portfolio that is flexible and diverse enough to handle market changes.

U4: Is homeowners insurance required? What form of insurance is homeowners insurance? What does it cover? What is a liability? What are the steps should you take when selecting a homeowners policy to file a claim?

a) When you buy a house, you are required to get homeowners insurance to protect the house and your belongings. b) Homeowners insurance is a form of casualty insurance, which covers you for loss of property, damage, and liability. c) A liability is something you are legally responsible for. d) 1. Mortgage requires homeowner's insurance 2. Choose an insurance policy 3. Examine the details of your homeowners policy 4. Add additional coverage if necessary(e.g. flood coverage) 5. File your insurance claim

U2: What is the purpose of a savings plan? How do your financial needs & savings goals change throughout your life?

a) You will need a savings plan to ensure you can achieve your goals. b) Your savings goals and your financial needs will change throughout your life. Example: Step 1: Achieve short-term savings goals in your teens Step 2: Seek financial independence in your twenties Step 3: Build personal wealth in your peak earning years Step 4: Create a secure future as an elder

U3: What is a lender also known as? How can lenders/creditors respond if you default on your loan? If you are consistently late on your payments or you default on your loan, what are the 6 things that lenders/creditors are permitted by law to do?

a) a creditor(A person or entity, like a bank, that is a lender.) b) Creditors have many tools they can use to address defaulted loans: suspending credit, garnishing wages, or repossessing property. c) 1. Charging penalties for late payments: Penalties for late payment are an added incentive for borrowers to pay back money in a timely manner. Fees and penalties can pile up and drive you further into debt. For example, if you are charged a late fee of $35 and that pushes you beyond your credit limit, you will receive a further penalty. 2. Using debt collection agencies: A lender might not have the ability to collect debts on their own and may hire a debt collector to do this work for them. Debt collectors have the single purpose of compelling you to pay. Although laws protect you from undue harassment, these professionals will call repeatedly until you make substantial effort to pay. 3. Putting a lien on property A lien is a form of security for a creditor. It gives a creditor the legal right to take your property, like a car or house. This encourages borrowers to pay back debt, because if they don't, they will lose something they own. 4. Foreclosure and repossession: Through foreclosure, a lender can take ownership of property if a borrower has defaulted on the loan, like a mortgage. The lender can repossess the property and sell it to someone else. Lenders can also repossess cars or other forms of collateral when borrowers default on their loans. 5. Garnishing wages and bank accounts: A lender is allowed to take money from a borrower's paycheck or bank account if the borrower has not made payments. If your wages are garnished, your employer is legally required to cooperate with the lender. Your employer will also learn about your debt. 6. Taking court action: A lender can go to court and ask a judge to enforce stronger penalties on a borrower who has failed to make payments. If you are sued for debt owed, the judge has the power to order you to pay or garnish your wages until the debt is repaid. A lawsuit can also result in your property being seized or your bank account frozen.

U3: What is a good place to start when beginning to manage debt? What forms of relief can lenders/creditors offer to the debtor?

a) direct, honest communication with the lender b) 1. Rewriting the terms of the loan: - You can request changes in the terms of your loan. These terms may include annual fees, late payment fees, monthly payment amounts, and grace periods — the amount of time between the billing date and the due date. - A lender might be willing to eliminate or reduce fees and extend grace periods. - Loans have term lengths — for example, 15 to 30 years for a mortgage. Extending the length of a term lowers monthly payments. 2. Reducing the interest rate: - Lowering the interest charged on a loan can sometimes dramatically reduce monthly payments. For example, a $300,000 loan with an interest rate of five percent will cost $1,610 per month. Reducing the interest rate to two percent would lower the monthly payment to $1,109. - For a mortgage, it's sometimes possible to refinance to take advantage of lower interest rates. Refinancing can sometimes save thousands over the life of a loan. 3. Absolving some debt: - If a lender determines that a borrower will never be able to pay everything that is owed, they may absolve, or forgive, some portion of the debt. - They may feel it is better to recover some of the debt rather than nothing at all. Asking for full or partial debt forgiveness can help reduce your debt but comes with consequences. If a lender forgives part of what you owe and gives you longer to pay back the rest, you will likely pay much more in interest by the time the debt is repaid.

U3: What are the 2 main types of credit? What is revolving credit? How does revolving credit work? What are examples of revolving accounts?

a) revolving & installment b) With revolving credit, your credit is automatically renewed as debts are paid. Revolving credit accounts allow you to borrow money against a line of credit and pay it back in monthly payments. These accounts usually come with assigned credit limits and are subject to finance charges and fees. c) 1. Kara's bank sets her up with a credit card account: Kara's bank says she can spend up to $1,000 on her credit card. This is her credit limit. She must keep her balance below this amount to avoid extra fees. Kara's credit card balance is adjusted from month to month based on her purchases and payments. As long as Kara has not reached her credit limit, she can continue to make purchases and borrow as needed. 2. Kara makes her first purchase w/ her credit card: Kara makes a purchase of $400 with her credit card. She has $600 left in credit, and she owes $400 in debt plus interest. Kara's bank makes money by charging interest on her credit card balance. Companies may offer fixed interest or variable interest rates. With a fixed interest rate, the rate stays the same over the length of the loan. Most revolving credit accounts have a variable interest rate, which means the rate changes over time. 3. Kara makes monthly payments on her credit card: Every month, Kara pays back part of what she owes. When she pays back the $400, she will once again have $1,000 available credit on her card. If Kara pays back all that she owes at the end of the month, she will pay little or no interest. But if she waits a year to pay back a loan, her bank will charge her 14 percent interest. This amounts to $56 in interest on her $400 balance. 4. Kara's unpaid balance is debt: When Kara used her credit card to make a purchase, she did not spend "her money." She borrowed money from the bank and must pay it back. It is easy to accumulate debt if you do not borrow responsibly. You may feel tempted to buy things you want with your credit card. However, it may be more difficult than you imagine to pay for them later with interest. It's best to spend responsibly and avoid the stress of building large amounts of debt.

U2: Give an example of a short-term goal. Give an example of a long-term goal.

a) saving money to buy a phone or concert tickets b) saving up for a car or college

U4: What are the two types of health insurance? How are they different? What is a managed care plan? What is its purpose?

a) public and private. - Public health insurance is provided by the government. Private insurance is purchased through an employer or insurance company. - Many private plans offer managed care b) - A type of health insurance plan that uses a network of providers to provide integrated care at a reduced cost. - A managed care plan keeps costs down by establishing a network of providers, including doctors, specialists, and facilities you can access for healthcare.

U5: On average how many times will a person change the course of their career path?

five to seven times

U1: What is employee benefit? What do employee benefits include?

a) An employee benefit is compensation you receive from your employer over and above your income. Employee benefits vary from job to job and career to career. b) - Most salaried employees receive paid time off - Many(not all) companies offer health insurance - Retirement & savings plans

U5: What is financial well-being? How do you calculate net worth? What is a financial plan? What does a budget help you keep track of? What is cash flow?

a) Being able to securely meet your current and future financial obligations. b) your net worth is the value of your assets (what you have) minus your liabilities or debt (what you owe) c) A document that provides a picture of someone's finances, goals, and strategies for achieving those goals. d) A budget helps you keep track of cash flow e) Cash flow is how much you take in versus how much you spend

U5: What is a Professional career? What are some examples of professional careers? How will you be paid if you follow a professional career path? What professionals tend to earn among the highest salaries on average?

a) A professional career is usually defined as one that requires a college degree or professional training b) Doctors, teachers, lawyers, architects, authors, and designers are all examples of professionals in their field c) you will likely be paid an annual salary d) Professionals in STEM careers — science, technology, engineering, and math

U5: What is a trade school? What are the advantages of attending trade schools?

a) A school providing instruction on a specific skilled trade or vocation. Also called career schools, vocational schools, or technical schools. b) - Going to a trade school can lead to many exciting career choices - Most programs can be completed in as little as a year or two - Trade schools give you hands-on training to prepare you

What are short-term savings goals? What are medium-term savings goals? What are long-term savings goals?

a) Three months to a year: Short-term goals might include saving for a new suit, a phone, or a weekend out of town. Creating a fund for emergency expenses would also be considered a short-term goal. The time horizon for short-term goals can vary but typically falls between a few months and a year. b) Three to five years: Medium-term goals could include saving for a car or moving into your first apartment. The time horizon for medium-term goals can be between one and three years. Some people dream of relocating to a new city, going to college, or starting a business. c) Five years or more: Long-term goals require more time to save for, sometimes several years. These can include saving up for a big wedding or the down payment on a home. Many people begin saving for their child's college education years in advance or set aside money for retirement. Long-term goals can be difficult to prioritize, but it's important not to lose sight of the future. It will arrive before you know it!

U1: How do you use a checking account?

After talking with the teller at his bank, John decides to open a checking account. He will use this account to write checks, pay expenses with a debit card, and withdraw money from an ATM. When John gets his paycheck, he will have it deposited automatically into his checking account. 1. Depositing Money: - John has decided to have his employer deposit his paycheck into his checking account automatically. He fills out forms to give his employer his checking account number. John can also deposit checks by using an ATM, using a banking app on his phone, or going to the bank in person. - When John deposits money, he must wait until it appears in his available account balance before he begins spending it. Deposits can take a few days before they clear, or are confirmed by the bank. Withdrawals will usually appear on his account instantly, especially if he gets cash from an ATM or uses his debit card for a purchase. 2. Writing checks: - A check is a promise for payment. The funds come directly from John's checking account. For the payee to receive this money, John must have enough money in his checking account to cover the amount of the check. Deposits might take a day or more to be recorded, so John should try to keep extra money in his account just in case a check he has written comes in faster than a deposit. - John's bank issues him a checkbook that he may use occasionally to pay for services. But John plans to use online banking services to schedule recurring payments for most of his bills. Rather than writing checks himself, he'll have the bank send the checks out for him. 3. Using an ATM or debit card: - When John opened his checking account, he received a debit card. John uses his debit card to make purchases and payments. A debit card withdraws money directly from John's checking account. If he doesn't have enough money in his account, his debit card will be declined or he will be charged an overdraft fee. - Debit cards also often double as ATM cards, which lets John withdraw cash directly, either at a machine or in person at his bank. He can also use an ATM to deposit checks or cash and to check his account balance before he withdraws cash. After he takes out money, his receipt will tell him the new account balance.

U1: How do you reconcile your bank statement(w/ steps)?

"When John gets a statement from his bank, he looks it over carefully to make sure he recognizes all the charges. He also notes if any checks or charges have not yet been removed from his account. This analysis is part of the process of reconciling a financial statement. Expand each step to learn more" 1. Compare deposits: First, John matches the deposits listed in the statement with those that he has kept listed in a section of his checkbook called the check register. He checks off the items appearing in both. 2. Compare checks & withdrawals & adjust the bank statement: - Next, John matches the checks, cash withdrawals, and purchases listed in the statement to the checks and withdrawals he has carefully tracked in his check register. He checks off items appearing in both. - John adds to the bank statement any deposits that have not yet been recorded by the bank. Then he subtracts outstanding checks — checks that have been written but have not yet cleared his bank. He also notes any fees that have been charged by the financial institution. 3. Compare balances & reconcile differences: - The total on the adjusted bank statement should equal his records. This also shows the actual amount currently available in his account. - If the balances do not match, John will need to look more closely. Most differences are just errors. Maybe John forgot a deposit or withdrawal. Or maybe he made a math error. Sometimes, though, the bank does make a mistake, like putting a deposit into the wrong account. - Occasionally, reconciliation errors reveal fraud. Someone may be using a checking account or debit card number for unauthorized purchases. If John suspects fraud, he should call the bank right away.

U1: What are the 4 types of financial institutions? What do they do? Are they more or less expensive than others?

1. Banks *Most well known financial institution 2. Credit unions: - Credit unions are member-owned financial institutions. - These institutions allow members to make deposits and withdrawals, use ATMs, get loans, and do almost anything else they could at a commercial bank. - But credit unions usually offer these services at a lower cost. Credit unions tend to cost less because, unlike commercial banks, they do not operate for profit. - Instead, credit unions simply work to provide financial services as inexpensively as possible for their members, which has made them an increasingly popular option. 3. Payday Lenders: - Unlike credit unions, payday lenders exist to make money. These for-profit businesses offer short-term loans at very high interest rates to people who might not be able to secure a regular loan from a bank or credit union. - Borrowers who use payday lenders are usually considered high risk, which is why payday lenders insist on being paid as soon as the borrower receives another paycheck. 4. Title pawn lenders Title pawn lenders offer consumers another option for getting short-term loans. As with payday loans, title pawn loans are mainly used by high-risk borrowers and tend to be costly. In this arrangement, borrowers give the title of their car to the lender as collateral for a loan. If the borrower can't pay back the loan, that person's car becomes the property of the lender.

What are the 6 types of investments?

1. Cash: A cash investment is a way for you to invest your money with low risk but also a low return. A basic savings account, money market account, or certificate of deposit (CD) is an example of a cash investment. You might be willing to accept the low return if you know you will need ready access to your funds — in an emergency, for example. 2. Retirement accounts Retirement accounts allow you to put money away for the future in a way that earns interest. Common types of retirement accounts include 401(k) plans, pension plans, and individual retirement account (IRA). Many retirement accounts are tax-deferred, which means they earn interest while protecting your money from taxes as it grows. 3. Bonds: A bond is a way of lending money to a government or business. You get interest payments on the bond, and after a set time period, you get the principal back as well. A bond is similar to a certificate of deposit (CD), except that with a bond you can typically withdraw money from it before the term is expired. This is not usually possible with CDs. 4. Stocks: A stock is a share of the ownership stake in a company. Units of stocks are called shares. Stocks are mostly bought and sold through stock exchanges. The value of stocks can fluctuate quite a lot. A company's shares might be up one week and down the next. Stocks often outperform other types of investments and investing in stocks can involve more risk. 5. Mutual funds & hedge funds - A mutual fund is a pool of money from a group of investors that is invested in various securities such as stocks and bonds. Each investor in the pool gets a share of the profits from the fund. - A hedge fund works in a similar way, but unlike a mutual fund, which is regulated and public, a hedge fund is private and only available to accredited investors. It is also generally a higher-risk form of investment. 6. Real estate Real estate is an investment in which paying down the property gives the value of the real estate, called equity, to the owner. If the real estate increases in value, the owner can sell the property for a profit. Although the value of real estate tends to go up over time, some real estate investments — like land that has no buildings — are higher-risk and can take a long time to make a profit.

U1: How do you fill out a check?

1. Today's date This tells the bank when the check was written. Checks may become invalid after a set number of months. 2. "Pay to the order of..." This is the person or organization that you want to pay. Because only this person or organization can cash the check, paying by check is safer than cash. 3. Payment amount(numeric) 4. Payment amount(text) 5. "Memo" This is the place to make a note to help you and/or the payee know what the check is for. 6. Signature line This is the line for your signature. Try to keep your signature consistent so that the bank knows this is a valid check written by you.

U5: How can high school guidance counselors help you?

a) They can help you identify possible career paths that are right for you: - They can answer many questions about postsecondary education(education beyond high school) - They can advise you on choosing between trade school and college or on selecting an academic major b) 1. Visit the guidance office 2. Use self-assessment tools(called an interest inventory, it helps you choose an academic major by identifying your strengths, skills, & interests. Examples include the Myers-Briggs Type Indicator, Personal Strengths Inventory, & the Holland Code) 3. Explore your personal network(ask people in the field you are interested in, about questions you have. You can also use connections to get an internship)

U1: What is the future of digital money? What is a blockchain?

a) Today there are new forms of digital money, called cryptocurrency, that are entering the financial world. You might wonder how a currency can be digital. A whole new kind of technology — blockchain — was required to make it possible. b) - A database that stores data in blocks for use as cryptocurrency

What factors influence cost of living?

The cost of living is how much you pay for goods and services. It varies by area. Factors that influence the cost of living include the costs of housing and transportation, groceries, utilities, health care, insurance, and consumer goods and services. The cost of living can affect the standard of living that people are able to attain.

U2: How can inflation affect common purchases(w/ examples)? How does inflation affect your future? Is inflation predictable?

a) - If a cup of coffee costs $2.95 today and the rate of inflation remains constant at 2%, then in 10 years, the cost of the cup of coffee will be $3.60. - If a new phone costs $99 today and the rate of inflation remains constant at 2%, then in 10 years, the cost of a new phone will be $120.68. b) Inflation affects what you will be able to buy in the future, as well as your ability to save money. As inflation increases, you will have to earn more money to keep up with the rising cost of living and goods. c) Unfortunately, inflation is unpredictable

U2: What is a short-term investment? How liquid are they? What are some examples? What is a long-term investment? How liquid are they? What are some examples?

a) - A short-term investment is typically held for a year or less. Stock market traders might hold a stock for as little as a few hours! - Low-risk short-term assets include money in your savings account and a short-term certificate of deposit that you set aside to reach a goal, like a trip or a purchase. - Short-term assets tend to be more liquid. A liquid asset is one that can be easily sold or quickly converted to cash, without b) - Most long-term investments are held for at least several years. - They gain value slowly, but they are predictable. Long-term investments include college funds and retirement accounts. Real estate, mutual funds, and bonds are also often held long-term. - Long-term investments are not as liquid as short-term investments. It is harder to convert them to cash, and there are often penalties for selling them early.

U2: Why is asset allocation important? What is a portfolio? How does asset allocation work?

a) - Because investment strategies need to balance risk with rate of return, people don't typically put all their money in one place. They spread the risk among their investments so that they aren't staking their entire strategy on a single asset. - Asset allocation determines which assets you'll choose to invest in: stocks, bonds, real estate, and so on. b) A collection of assets that fit your goals, tolerance for risk, and future needs. c) In asset allocation, you balance risk and reward by creating a portfolio of assets that fit your goals, tolerance for risk, and future needs.

U1: How can you access your account? What are the 4 most common types of accounts? How do they work?

a) - Most of these accounts can be accessed on-site at a bank - through an automated teller machine (ATM) - through an online account or smartphone app. b) 1. Checking account: - Most people use a checking account for money that they will need right away. It is called a "checking" account because banks provide a checkbook to use if you want to pay someone with a paper check. - You can access the money in your checking account in person at the bank, through an automated teller machine (ATM), or online. A debit card is also connected to your checking account. It might look like a credit card, but when you use your debit card, the money is withdrawn directly from your checking account. - Some types of checking accounts pay a very small amount of interest. Banks may also require you to keep a minimum balance or pay a fee to maintain your account. 2. Savings account: - A savings account is the most basic type of bank account. You can add and withdraw money as you need, but savings accounts are not as convenient as checking accounts. - To get money from your savings account, you'll need to make withdrawals in person at your bank, transfer funds online, or use an automated teller machine (ATM). You can make up to six withdrawals or transfers per month out of your savings account. In exchange for letting the bank hold your money, the bank pays you interest. The interest accumulates in your account, helping the balance grow. Banks sometimes require you to keep a minimum balance or pay a fee for your savings account. 3. Money market account: - A money market account is a cross between a savings account and a checking account. You can deposit money into the account anytime you want. You can use the account to make check or debit card payments, and it pays a higher interest than standard savings accounts. - But money market accounts only let you make a few transactions each month — usually no more than six. And you usually need more money to open a money market account than a checking or savings account. You also must keep a minimum balance in the account, or you must pay a fee. A money market account may not be the best choice if you have little savings or want easy access to your money. 4. Certificate of deposit: - A certificate of deposit, or CD, is a savings account in which you deposit money for a set period of time, such as six months, a year, or even longer. You cannot withdraw your money until this time passes, unless you pay a penalty. - CDs offer fixed rates throughout their term.

U1: What are the 5 types of income? What is a salary? What is a wage? What are the pros & cons of a salary? What are the pros & cons of a wage?

a) - salary - hourly wages - tips - interest & dividends - other income(money that comes unexpectedly like a gift card) b) A salary is an agreed amount of annual pay a person receives from an employer, generally paid weekly or twice a month. Even though a full-time job is typically 40 hours per week, salaried employees often work more. c) A wage is based on the number of hours an employee works. Employees are guaranteed a certain hourly rate of pay, which is multiplied by the number of hours they work. Wage-based jobs can be full-time or part-time. The more hours an employee works, the more money they earn. d) PROS of a Salary: - Most salaried employees also receive employee benefits, such as paid time off for holidays and illness - Medical insurance benefits CONS of a Salary: - Less flexibility e) PROS of a Wage: - More flexibility - You can set your own hours CONS of a Wage: - hourly workers don't receive as many employee benefits as salaried workers - no paid time off for holidays or illness

U1: What are newer types of digital payments?

a) 1. Digital wallet: - A digital wallet is an app on a smartphone or other digital device. It is called a wallet because it securely stores your information and passwords for several payment methods and websites. - To protect your sensitive information, a fingerprint sensor is usually used to allow access. 2. QR codes: - A QR code, or "quick response code" can be read and understood by your smartphone. You usually hover your phone's camera over the image until a link pops up. - QR codes are used in many ways. You can download apps, find product information, and even have a product shipped to 3. Smart speakers: Smart speakers let you shop using your voice. You can program your speaker to link directly to an online store or a web application of your choice and use the payment method you prefer. Typically people link a credit card or bank account. 4. Instant payment: Instant payment applications make financial transactions in real time. They are frequently used to pay another person on the spot for anything from rent to splitting a restaurant tab, making them very popular for small, social transactions.

U1: What is a financial institution? What are the 3 categories of financial institutions? What kind of companies do they include?

a) A financial institution is an organization that processes financial transactions, including investments, loans, and deposits b) 1. depository institutions - Depository institutions accept monetary deposits from businesses and individuals and hold them in accounts from which they can be withdrawn on request. - Depository institutions also offer credit and loans in the form of credit cards, home mortgages, and car loans. - The most common and important type of depository institution is a commercial bank. 2. contractual institutions - Contractual institutions include life insurance companies and pension plans in which deposits are held over a long period and withdrawn at a later date. - Life insurance companies offer policies that people pay for during their lifetimes, so that when they die, their families get a sum of money. Pension funds agree to pay depositors a fixed monthly sum when participants retire at a certain age. 3. investment institutions - Investment institutions include investment banks, underwriters, and brokerage firms. - Individuals deposit money in these institutions, which the institutions then invest in a variety of ways, including in stocks and bonds. If the investments increase in value, the depositors earn money on top of their initial deposit. But because these funds are not guaranteed, investors can also lose money, including their initial deposit.

U1: What is "medium of exchange"? What is digital payment? What are the 3 advantages of digital payment?

a) A good or object generally accepted in exchange for the sale, purchase, or trade of goods between groups of people. Examples: - Thousands of years ago, humans bartered & traded goods - Many years later, coins & then cash were eventually invented - Now, our medium of exchange includes cash, debit cards, credit cards, & even virtual payment methods b) With a digital payment, both the buyer and seller use technology to send and receive funds c) 1. Convenience for buyers: When you pay digitally, you purchase goods from home or at the store with the touch of a button or the scan of a QR code. If you have your credit card or bank information stored on your phone, you may not even need to carry money in your wallet. Digital payment apps also make it easy to send money to friends or family members. 2. Convenience for sellers: Digital payments offer sellers convenience and flexibility. Mobile point-of-sale devices make it easier for sellers to accept payment at trade shows, food trucks, concerts, and farm stands. Stores and restaurants can check customers out from anywhere on the premises. 3. Digital payments are faster and more secure than other technologies because digital codes are unique to each transaction. Experts say that the growing use of biometric authentication like facial recognition will make digital transactions even safer.

U2: What is a long-term goal? What is a short-term goal? What is personal financial planning? What are short-term savings(w/ examples)? What are long-term savings(w/ examples)?

a) A long-term goal describes what you're aiming for in a year, 10 years, 20 years, or more. b) A short-term goal is a step you'll need to take along the way. For most people, a long-term goal takes planning, and each short-term goal is a necessary step in attaining that larger goal. c) Making plans for your financial future, for meeting both short-term goals and long-term goals, is called personal financial planning. Without savings, you cannot achieve your financial goals. d) Possible short-term savings plans for a high school student might include a weekend with your friends or buying concert tickets, a bike, or a laptop. You might consider setting money aside in a savings account that pays you some interest. That way, you won't be as tempted to access the money for everyday purchases, and you will get some rate of return. e) - Short-term goals take only a little planning, but long-term goals may take a great deal of planning and involve many steps along the way. - Possible long-term savings plans for a high school student could include paying for travel, education, or a nice car. Take an inventory of the money you have from part-time jobs, gifts, and all other sources. You can invest a portion of your money in a certificate of deposit or ask for investment advice from a professional about stocks and mutual funds.

U2: What is nominal interest rate? What is Annual Percentage Yield(APY)?

a) A nominal interest rate is a basic rate that shows how much your money will earn in 1 year. These rates have not been adjusted for inflation. b) The rate of return on an investment for one year. Example of APY: - "Fabrice does not plan to use her inheritance for at least 3 years. She decides to deposit all $10,000 in a three-year CD with 3% interest. To determine how much interest she will earn in her first year, she multiplies her initial deposit by 3% to get $300. This is her annual percentage yield, or APY. Annual percentage yield is the effective rate of return on an investment for one year." - "Each year, Fabrice's savings continues to grow by 3%. And because she earns compound interest on her account, her money will grow even more. Remember: interest that is compounded is added back to your principal."

U1: Are payroll deductions mandatory or voluntary? What are mandatory deductions? What are Elective deductions?

a) A payroll deduction can either be mandatory or voluntary b) Mandatory deductions are withholdings that employers are required to take from your paycheck. They include money that is taken out to pay federal and state taxes, as well as FICA (Federal Insurance Contributions Act). Employers deduct these taxes from your paycheck for you. That way, a big tax bill does not surprise you at the end of the year. c) Elective deductions include money you choose to set aside to save, donate, or invest. Deductions for employee benefits like retirement or healthcare accounts are also considered voluntary.

U5: What is an entrepreneur? What are the disadvantages of being an entrepreneur? What are the advantages of being an entrepreneur? What fields are entrepreneurs in?

a) A person who takes on the risk of starting and running a business. b) - Entrepreneurs often work long hours - They have to balance a degree of uncertainty about the success of their venture with the possible rewards c) - Those who choose this path enjoy the sense of freedom and independence it can provide - When you are an entrepreneur, you don't have a boss, and your hours can be somewhat flexible as a result. d) There are entrepreneurs in all fields — from aerospace to zoo keeping.

U1: What is property tax? Who is responsible for collecting property tax What is the amount a homeowner pays on property taxes based on? Is property tax considered as a regressive or progressive tax?

a) A property tax is a tax on the real estate you own. b) Local governments are responsible for collecting this tax in most states. c) The amount a homeowner pays in property taxes is based on the value of the property and is different from state to state. d) Because taxes are assessed on the property's value, not the homeowner's income, property taxes are considered a REGRESSIVE tax

U5: What is a tradesperson? What is a trade? What are the requirements to be a tradesperson? How are tradespeople paid?

a) A skilled worker who is qualified to work in an occupation that requires practical training. b) A profession involving specialized technical knowledge and competence in a practical occupation. c) - Some type of vocational education(Training in a skill or trade intended to be pursued as a career) - OR time spent as an apprentice(A person who works for low or no wages for a period of time in order to gain experience or skill in a chosen field or trade) d) Many tradespeople earn hourly wages, though some earn a salary

U1: What is income tax? Who pays income tax? Who collects income taxes? Does income tax increase or decrease with the amount of money you make? What is the incremental percentage you pay called? How is it determined? Is income tax considered a regressive tax or a progressive tax?

a) A tax applied by the government on a person's income. This tax is applied annually. b) Most working adults are required to pay an annual income tax c) Income taxes are collected at both the federal and state levels, and they fund a wide variety of services included health care and education d) Income tax increases with the amount of income you make e) The incremental percentage you pay, or marginal tax rate, is determined by your tax bracket. f) There are several tax brackets, and they sometimes change. Tax brackets increase with higher earnings. Those with more income pay a bigger percentage of their income in taxes. This is why income tax is called a PROGRESSIVE tax.

U1: What is sales tax? When do you pay sales tax? What do sales taxes usually range from? Who imposes sales taxes? How do they use the revenue? Is sales tax considered a regressive or progressive tax?

a) A tax applied by the government on the sale of goods and services. This tax is usually paid at the time of purchase. b) Depending on the state where you live, you might pay a sales tax every time you buy a pack of gum, a latte, or a sports drink. Sales taxes usually range from 2% to 10%. These taxes are imposed by state and local governments, which need the tax revenue to pay for services that benefit the local community, like schools and hospitals. c) Sales taxes usually range from 2% to 10% d) These taxes are imposed by state and local governments, which need the tax revenue to pay for services that benefit the local community, like schools and hospitals. e) A sales tax is considered a REGRESSIVE tax because it takes a greater percentage of income from a lower-income person than from a higher-income person. This is because everyone pays the same sales tax rate on an item, regardless of income.

U2: What is an interest-bearing account? How is an interest-bearing account a smart way to save? How much interest does a Checking account pay? How much interest does a Savings account pay? How much interest does a Certificate of deposit pay? How much interest does a Money market account pay?

a) An account that pays you interest for the money you have deposited. b) You could put all your extra money in a jar, for example. But that money will never gain any interest. A smarter way to save would be to put your money in an interest-bearing account. c) - Checking accounts pay little or no interest - Checking accounts are great for your everyday needs. You can access cash quickly at an ATM, use a debit card to make purchases, or write a check to your hairdresser. - But checking accounts pay zero or very low interest, so they may not be good choices for long-term savings. d) - Savings accounts offer slightly higher interest rates. - A savings account will typically offer a slightly higher interest rate than a checking account. But most savings accounts still only offer interest rates that are less than 1 percent. Still, savings accounts are a good place to set aside the money you are saving toward a financial goal or to keep emergency funds. And you will be less likely to spend money in an account that's slightly more difficult to access e) - Certificates of deposit pay a little more interest for long-term deposits. - Also called a CD, a certificate of deposit offers a higher interest rate than a checking or savings account. Interest rates on CDs vary, depending on the financial institution, so it pays to shop around. One limitation to consider is that you must commit to leaving your money untouched for a period of time, usually from one to five years. The longer you commit the funds, the higher the interest rate. That makes CDs a good choice for saving in the long term. f) - Money market accounts offer interest and flexibility. - A money market account will pay a higher interest rate than a regular savings or checking account. Money market accounts have variable interest rates but let you withdraw necessary funds more easily than certificates of deposit. Account holders typically receive a limited number of checks to use each month. People often choose to pay their large bills, like a mortgage, from their money market account.

U2: What is a downpayment? What is the purpose of a downpayment? Will you have to pay more or less interest with a higher downpayment?

a) An amount paid by a buyer to a lender that reduces the remaining amount to be repaid. b) Most people take out loans to pay for large purchases like homes and cars. If you can't afford to pay the full price of a home or car up front, you will need to give your lender a down payment. Your down payment will reduce the remaining amount you owe. It also proves to the lender that you are committed to paying back your loan. c) The higher the down payment, the less interest you will pay

U5: What is a career? What should you consider as you choose your career path?

a) An employment path within a profession or occupation b) - job benefits - flexibility - work-life balance(A healthy blend of time spent at work and time spent outside of work)

U1: What is a fixed expense? What are some examples of fixed expenses? What is a variable expense? What are some examples of variable expenses?

a) An expense that is predictable and ongoing. b) Examples of fixed expenses: - your cell phone bill - Rent or mortgage - Utilities - Transportation passes - Insurance c) An expense that is unexpected or changes over time. d) Examples of variable expenses: - Clothing - Car repairs - Restaurants - Medical emergencies

U1: What is an independent contractor? What is a gig company? What are some jobs for independent contractors?

a) An independent contractor is a self-employed individual who performs work or supplies services for a fee *Characteristics of an independent contractor: - working for yourself - having multiple jobs - working in a gig economy b) A labor market consisting of a number of short-term contracts or freelance work. In a gig economy companies usually hire independent contractors and freelancers instead of permanent or full-time employees. c) Independent contractors might design buildings, direct movies, or fix cars. If you babysit or get paid for caring for a neighbor's pet, you are also working as an independent contractor.

U1: What best defines "Common living expenses"? What are the common living expenses?

a) Common living expenses include items that nearly all consumers everywhere need just to get by. b) Almost everyone has to pay for housing, utilities, food, transportation, taxes, savings, and personal expenses *Insurance also counts

U5: When is it required to fill out a Free Application for Federal Student Aid(FAFSA)? What are the steps when filling out a FAFSA? Should you fill out a FAFSA if you don't think you qualify for financial aid? Why?

a) Federal grants, loans, and work-study programs require students to fill out the Free Application for Federal Student Aid b) 1. Get a Federal Student Aid ID 2. Gather the necessary documents 3. Complete & file your application 4. Review & submit a Student Aid Report 5. Review & choose a financial aid package c) YES! Here are a few reasons to consider: - Your school could surprise you and offer aid you did not know was available. - Your financial situation might change, which may make you more qualified. - Interest rates may change, which could make some loans more appealing.

U5: What is financial aid? What is a scholarship & what does it depend on? What are grants & what do they depend on? What are student loans & what do they depend on? What is a Federal Work-Study?

a) Funding for postsecondary education that doesn't come from you or your family, & helps a student pay for educational expenses b) A scholarship is a financial aid award that helps students pay for college. Scholarships are usually awarded based on academic performance, merit, or another talent or ability(To get one, you need to apply & meet the requirements) c) A grant is a financial aid award based a student's financial need. Grants usually come from the federal government, state governments, colleges or career schools, or private organizations. Like scholarships, grants do not need to be paid back unless the student withdraws from school before completing the program(Grants are based on financial need & students or parents need to fill out the FAFSA to be eligible) d) A student loan is money used to pay for education that must be repaid with interest. Students can borrow money either from the federal government or from private financial institutions. The Federal Direct Loan Program provides both subsidized and unsubsidized low-interest loans to postsecondary students. Subsidized direct loans are only available to students who have demonstrated financial need. All students must complete the FAFSA to receive a federal loan. These loans usually have lower interest rates than private loans. e) The Federal Work-Study (FWS) program offers college students who have financial need a way to earn money to pay for their education while they are still in school. Students receive at least federal minimum wage while participating in the program. Students must complete the FAFSA to be eligible to participate in work-study programs. Students can find work-study opportunities through college job banks or through postings by the financial aid or college employment office.

U2: What are emergency funds? Why are emergency funds important? What are some common unforeseen expenses that emergency funds can help with?

a) Funds available for use in emergency situations. b) Setting aside emergency funds should be part of your short-term savings goal planning. Having emergency funds on hand will help you with small unforeseen expenses. c) - You lose your phone - Your car breaks down - Your laptop quits - Your textbook is missing

U2: What best defines high-risk investments? What are 3 common examples of high-risk investments? What are their average return rates?

a) High-risk investments offer a higher rate of return, along with greater risk. b) 1. Stocks: - A stock is a share of ownership in a company. Investors buy shares in a company's stock, whose value rises or falls in relation to the company's performance, as well as the overall strength of the economy. - Stocks have different levels of risk, but any stock can make dramatic gains or losses in value. In general though, buying stock in a well-established company is less risky than buying stock in a new, unproven company. - The average rate of return on stocks is about 10 percent, while the average loss is roughly 9.5 percent. 2. Mutual Funds: - A mutual fund offers investors slightly less risk than stocks because the investment is spread over several companies instead of just one. - Investors in mutual funds select their level of risk and the length of their investment. Long-term investments have higher rates of return than short-term investments. A fund held for 20 years, for example, has an average rate of return of 7 to 8 percent, while a fund held for 5 to 10 years has an average return of only 1 to 2 percent. 3. Hedge Funds: - In a hedge fund, a fund manager combines money from several investors and aggressively invests it with the goal of maximizing returns. - Hedge funds have a high rate of return — averaging around 13 percent. However, they are also high-risk, and investors can lose a lot of money. In addition, hedge fund managers charge an up-front investment fee of 2 to 20 percent to manage the investments, adding to the cost.

U2: When should you consider investing in stocks, bonds, or mutual funds? Do higher earnings, or a better return of return, come with more or less risk? What are stocks, bonds, & mutual funds? How do they work? Are they low risk or high risk?

a) If you are looking to earn even more interest on your accounts and deposits, then investing may be a wise savings strategy for you. b) Higher earnings, or a better rate of return, often come with more risk. c) 1. Stocks: - A stock is a small share of ownership in a company or corporation. Buying a share of stock means you own a small part of the business. - Stock value changes depending on the performance of the company. Investing in stocks can earn you a lot of money. But buying stock can be risky because if the stock value falls, you could lose your investment. - Stocks can be a valuable investment for long-term savings goals, such as saving for retirement. Over time, the performance of a stock can vary, so it's important to choose wisely. You may wish to hire an investment professional to help you make a decision on which stocks to purchase. 2. Bonds - A bond represents a loan by an investor that is repaid by a borrower. Bonds are often issued by state and federal governments to help finance big projects like highway construction. - Bonds, including the U.S. Treasury bond, are repaid to investors after a certain amount of time. Think of bonds as IOUs between the investor and the borrower. - Bonds are a secure long-term investment, but have lower rates of return than some stocks. They are a solid investment for a modest return, especially if you can't afford to take on a lot of risk. 3. Mutual funds: - A mutual fund lets you participate in a mix of investments, including stocks and bonds. Mutual funds are seen as less risky than single stocks because your money is divided across many different companies. - If one company performs poorly, you are still invested in other companies that may be performing very well. Mutual funds are a common part of retirement accounts, but this type of investment can also help you save for other medium- and long-term goals.

U5: What is the purpose of filling out a CSS profile? What do you need to indicate in the CSS profile? What are the PROS of a CSS? What are the CONS of a CSS?

a) In addition to the FAFSA, you may need to fill out a supplemental form called the College Scholarship Service Profile, or CSS Profile. The CSS Profile provides a more detailed financial picture for schools that are considering your eligibility for nongovernmental financial aid. b) you'll need to indicate the colleges and universities you're interested in attending c) - Usually, the schools that require the CSS Profile have large endowments — forms of income or assets that were given to them. That means they likely have more scholarships and other forms of financial aid than most schools. - The CSS form provides an even more detailed picture of a family's finances than the FAFSA. It also provides a window into any unique circumstances that affect a family's ability to pay for school. d) The CSS form is very detailed. It takes considerable effort to fill out. Not every family is comfortable with the level of financial detail it asks for. These details include tax returns, W-2 forms, records of untaxed income and benefits, assets, and bank statements.

U2: How does interest relate to inflation in terms of effects on savings? What is real interest rate? How do you calculate real interest rate?

a) Interest and inflation have opposite effects on savings. b) Interest rate that is adjusted for inflation and reflects the rate of growth of purchasing power. c) To calculate the real interest rate, you subtract the rate of inflation from the nominal interest rate. In Fabrice's cased that is 3% minus 2%, or a 1% real interest rate.

U2: What best defines low-risk investments? What are 4 common examples of low-risk investments? What are their average return rates?

a) Low-risk investments are considered safer than high-risk investments, but they are not risk-free. These investments also offer investors smaller rates of return. b) 1. Savings accounts: - A savings account is a very low-risk investment because deposits up to $250,000 are insured by the Federal Deposit Insurance Corporation (FDIC). Therefore, there is virtually no risk that depositors will lose their money because the FDIC will cover any investments that are lost if the bank fails. - Since savings accounts are very low risk, the rate of return is very low as well. Most banks pay less than 1 percent interest on savings accounts. 2. Certificates of deposit: - A certificate of deposit — or CD — is an account that provides customers with higher rates of return than savings accounts. As a trade-off, however, depositors must agree to keep funds in the CD for a specific time period, usually between three months and 10 years. The longer the funds remain in the CD, the higher the interest rate and therefore the higher the rate of return. - Average interest rates for CDs are between 1 and 2 percent. 3. Bonds: - A bond is a loan that is repaid at a set time. The most common type of bond issued in the United States is the U.S. Treasury bond. Treasury bonds are issued by the U.S. government. Purchasing one of these bonds is essentially making a loan to the government. In exchange, the government agrees to pay investors a guaranteed rate of return. Similar to CDs, investors agree to hold the bond for a specific period, usually between 5 and 10 years. - The rate of return on Treasury bonds is low, usually between 1.5 and 2.5 percent depending on the length of the bond. 4. Retirement accounts: - Retirement accounts allow depositors to save money for retirement. The most common type of retirement account is a 401(k), which is available through an individual's employer. People deposit a percentage of their pretax income in this type of account, and then pay taxes on the money when they withdraw it during retirement. Another common type of retirement account is the individual retirement account, or IRA. - Retirement accounts offer portfolios with investment options that can be high or low risk. Returns on this type of investment depend on the amount of money you contribute and the account's level of risk. Historically, the rate of return on retirement accounts has been between 7 and 10 percent.

U1: What is the purpose of the tax system? What are the different times of income tax?

a) The tax system is in place to fund the common things people depend on. b) 1. Federal Income Tax: Federal income tax helps pay for services provided by the federal government, such as health care, military defense, and scientific research. Federal income taxes are collected by the Internal Revenue Service and are typically due by April 15 of every year. 2. FICA: FICA has two parts, and a portion of the cost is shared by your employer. Social Security provides income for retirees and people with disabilities, while Medicare provides medical insurance for retired Americans. 3. State income tax: State income taxes pay for services provided by state governments, such as roads, safety, and health. Not all states levy an income tax. 4. Local income tax: Some cities have an income tax to pay for services provided by the city or other local government, such as schools, police, and fire protection.

U1: How do people depend on banks & credit unions? What are the 4 key services that banks & credit unions provide? What is interest? What is credit?

a) Most people depend on banks or credit unions for their daily banking needs. b) Key services include: 1. Checking and savings accounts: - Retail banks offer checking and savings accounts to individuals or businesses. - A personal checking account gives customers a safe place to keep their money while still allowing them to access it via debit cards, checks, or ATM withdrawals. - A personal savings account is similar, but the money in the account earns interest. 2. Loans: A loan is money that someone borrows from a bank and pays back in fixed monthly payments over time. People must also pay banks interest on these loans. Individuals often take out loans from banks for large purchases, like buying houses and cars, or financing a college education. 3. Credit Cards: A credit card is a line of credit issued by a bank or credit union that allows customers to purchase goods or services and then pay back the cost over a period of time. The longer you take to pay back the money, the more interest you pay. c) The fee paid for using other people's money — also called finance charge. d) An agreement between a lender and a borrower, in which the borrower repays the money over time with interest.

U1: Where do people who earned money in the previous year have to pay their money to? How is income tax calculated? What is the portion of your wages that's sent directly to the government by your employer called? How do employers determine the amount to take out for taxes? What is a W-4 form? What is its purpose? What sections are on the W-4 form?

a) Most people who earned money in the previous year must pay an annual income tax to the Internal Revenue Service(aka the IRS which is in charge of collecting taxes & enforcing tax laws) b) Income tax is not calculated based on gross income, but instead on something known as taxable income. Taxable income is a person's gross income minus deductions. c) withholdings d) Employers use tax guidelines along with the information you supply on a W-4 form (Employee's Withholding Certificate) to determine the amount to take out for taxes. e) A form an employee fills out to help an employer determine how much tax to withhold for that employee. d) - Filing status(if you're married, & thereby filing jointly w/ your spouse or separately) - Number of jobs - Number of dependents - Other income or deductions

U5: What is a financial aid letter? What information is included in a Financial Aid Letter?

a) Schools that accept you as a student will also send you a financial aid letter. These letters describe the financial aid package that the school is offering you. b) - Estimated cost of attendance - Expected family contribution - Scholarships & Grants - Net cost - Student loan options - Work-study options

U1: Why is it important to make informed decisions? What are the steps you should take to determine on your own whether you should buy a particular product?

a) Sellers will try to convince you to buy a product by making claims about its quality and what it can do. As a smart consumer, you shouldn't take sellers at their word. b) 1. Read descriptions carefully 2. Read qualified reviews 3. Be wary of testimonials 4. Review warranties and return policies 5. Make purchases with confidence

U5: What is the 50-30-20 Rule? What does the 50-30-20 Rule do? What are the steps to create a budget? How is a financial plan similar & different to a budget? In a financial plan, what are liquid assets, nonliquid assets, & Liabilities?

a) Spend 50 percent of your income on needs, 30 percent on wants, and 20 percent on goals b) This rule helps you balance your spending and use your money effectively. c) 1. List all your sources of income 2. Track your monthly expenses & spending 3. Identify how much money you need to save to reach your goals 4. Stick to your plan & adjust as needed! d) A financial plan is similar to a budget. However, it is more long-term and takes more variables into account. It looks at your present and future cash flow, the value of your assets, and how you think you will use your money in the future. e) - Your liquid assets include cash and investments that can be converted to cash quickly with no loss(e.g. short-term savings goals like vacation & money held in checking or money market market account). - You need liquid assets in case of an emergency or other unforeseen expense - Nonliquid assets include long-term investments like real estate & retirement savings(there are penalties or losses for using them in the near future). A long term certificate of deposit is another example. - A liability is something you owe or are responsible for. Student loans, car loans, a mortgage on your home, and credit card debt are all examples of liabilities(they are neither good nor bad it does need to be properly managed)

U1: What is cost of living? How is an individual's standard of living tied to the cost of living?

a) The cost of living is how much you pay for goods and services b) Like standard of living, cost of living varies by area. Factors that influence the cost of living include the costs of housing and transportation, groceries, utilities, health care, insurance, and consumer goods and services.

U1: What is "standard of living"? What does "standard of living" indicate? What is income? What is wealth? What are signs of high standard of living? Is access to necessities a human right?

a) The degree of wealth and material comfort available to individuals or a community b) Standard of living does not necessarily indicate personal well-being or happiness. It is a measure, however, of income and wealth, material goods, and access to life's necessities. c) Income is the money a person earns from a job or through investments. d) Wealth can be defined in many ways. In financial terms, wealth is the combined value of everything a person owns, such as a house or car. e) - a person who has a newer, more reliable car may have a high standard of living - owning your own home can also be an indicator of a higher standard of living *HOWEVER, people fewer possessions also have a relatively high standard of living, especially if they have fewer responsibilities and less personal debt d) Access to food, clothing, shelter, education, and clean running water are basic human rights. But not everyone has easy access to these. One reason the United States is considered to have a higher standard of living than many countries is because people have easier access to these necessities. But even in the United States, access to all life's necessities is not guaranteed.

U2: What is equity? How is equity calculated? How does equity contribute to your net worth?

a) The value of ownership in something. b) If you own a home outright, your equity is equal to its full value. If you have a home loan, your equity is equal to your down payment and any other payments you've made on your loan. Equity in assets like a house can be considered part of your savings. It can help you pay for long-term financial goals, and it contributes to your overall net worth.

U1: What are overdrafts? What is overdraft protection?' What is the simplest way to avoid overdraft fees?

a) When John writes a check, withdraws money, or uses his debit card to make a purchase, the funds come directly from his checking account. If he takes out more money than he has in the account, the result will be an overdraft. Any outstanding checks will not be paid, and his bank will likely charge a fee for each overdraft. b) Some financial institutions offer overdraft protection to customers. Overdraft protection usually links your checking account to another account, such as a savings account, and automatically moves funds from there. However, there may be fees. c) The simplest way for John to avoid overdraft fees is to maintain a positive account balance. To do this, he should check his account balance regularly.

U5: What should you use first when paying for college? What is a subsidized loan? What is an unsubsidized loan? What are the steps to avoid taking too much debt from loans?

a) When paying for college, it is highly recommended that you try to use grants, scholarships, or a federal student loan first. Private student loans should only be used as a last resort as they tend to have high interest rates that can grow higher over time. b) For a subsidized loan, the federal government pays the interest on your loan while you are in school and for six months after graduation. c) For an unsubsidized, you pay interest the whole time you have the loan. d) 1. Compare all student loan options & costs 2. Take advantage of federal loans first 3. Understand your repayment terms & pay off high interest loans first

U5: When do people have job satisfaction? What are employee benefits?

a) When people find meaning or purpose in their career, they have job satisfaction. b) Nonwage compensation provided to employees in addition to their wages or salaries.

U1: Why is it important to plan for the expenses you'll face? What is a budget? What are basic monthly expenses? What does the amount you need to budget for monthly expenses depend on?

a) Whether you earn more than a living wage or less, it is critical to plan for the expenses you will face. Most people do that by creating a budget. b) A plan estimating income and expenses for a set period. c) Basic monthly expenses include items that nearly all consumers everywhere need just to get by, such as housing, utilities, food, transportation, taxes, savings, and personal expenses d) How much you need to budget for monthly expenses will depend on cost of living, household income, and a variety of other factors.

U2: What is the Rule of 72? How does the Rule of 72 help increase your money overtime?

a) Years to double = 72 ÷ rate of return on investment b) It's a way to quickly determine the number of years required to double a sum of money at a given annual rate of return.

U1: When do salaried & wage-earning employees receive a W-2 form? When do employees receive a 1099 form? When do employees use a 1040 form? What is a W-2 form? How does it help you? What is a 1099 form? How does it help you? What is a 1040 form? How does it help you?

a) You should receive a W-2 from your employer by January 31 each year. b) If you are an independent contractor or freelancer, you will receive a 1099 form from each of the companies or clients you worked for. c) On or before April 15, you will then use a 1040 form to file your federal taxes with the Internal Revenue Service. d) - The W-2 form is an official document from your employer that lists how much income you earned in the year. It also notes deductions that were made from your regular paychecks, including income tax withholdings — the money you have already paid to the government. - Your W-2 will help you figure out whether you need to pay more money in taxes in April — or whether the government owes you a refund. e) - Freelancers and independent contractors receive a 1099 form from each company or client that paid them in the past year. A copy, with your Social Security number, is also sent to the IRS. - There are other types of 1099 forms that report miscellaneous income you may have received during the year other than salary, such as income from rents, prizes, or awards. f) - The 1040 form is the official IRS tax form that most people complete when submitting yearly income tax returns. - This form helps you calculate whether you own any additional taxes or if you are due a tax refund. In general, people need to provide information on their total salary and income on this form.

U1: What decides how much you earn? What are the three factors that most employers will consider?

a) Your income depends on many factors, but in general the labor market decides how much you earn. Your employer will decide what to pay you based on how much other employees make for the same type of job. b) - Education(people w/ a college degree or go to a trade school will have higher employment opportunities than those w/ just a high school diploma) - Prior work experience - Skills

U1: What is a digital asset? What are the 4 main types of digital assets?

a) a digital asset is something that is stored digitally. b) 1. Loyalty & reward points: Companies build brand loyalty by offering reward points when you purchase their products, along with discounts and other incentives to come back and purchase again. These companies also collect information on your spending habits and what products or types of offers you like. Points have value. 2. Airline miles: Frequent flier miles, or travel points, are another type of loyalty program that airlines and credit card companies offer. The more you fly, the more miles you accumulate. These miles can be used to purchase more tickets. 3. Gift cards: A gift card is a prepaid debit card that is linked to an account by an embedded microchip or identification number. When someone gives you a gift card, that person has already paid the full amount of the card. Every year, millions of dollars in gift card assets go unused. The company issuing the card benefits. 4. Gaming assets: One aspect of online gaming is the purchase of virtual items. These may be purchased with the game's virtual currency or with real money. Assets include character clothing, tools, and supplies. Increasingly, these assets are traded outside the game world using digital payment.

U1: When do you get a tax refund? What are the two ways to reduce the amount of income tax you owe to the government?

a) if too much money is withheld from your paycheck, you will receive a tax refund after you file your taxes b) 1. Tax deductions: Medical expenses are one kind of tax deduction. Tax deductions reduce the amount of income that can be taxed, thereby lowering your taxable income. There are various types of deductions you can claim, including donations to charity, home mortgage interest, and certain educational expenses. c) Tax credits: Tax credits are subtracted from the amount of tax to be paid. You must meet certain rules to qualify for a tax credit and some tax credits can result in a refund. The American opportunity tax credit, for example, gives a tax reduction to students during their first four years of higher education. There are also tax credits for childcare and certain kinds of investments.

U5: What is a good rule of thumb regardless of what decisions you make with your financial plan? What are the four ways to plan for unexpected events?

a) try to live within your means b) - Set aside emergency funds - Allocate assets across the risk spectrum - Diversify investments - Live within your means

U1: What are the pros & cons of Cash? What are the pros & cons of Checks? What are the pros & cons of Credit Cards? What are the pros & cons of Debit Cards?

a) Cash: PROS: - No interest charges - Typically accepted everywhere - Can set a limit on spending CONS: - No protection from loss - Inconvenient for large purchases b) Checks: PROS: - Are convenient to send by mail - Can be used to pay individuals or businesses that don't have a way to accept credit cards - Can only be cashed by the intended recipient CONS: - Are not accepted by retailers everywhere - Take longer to process than other financial transactions c) Credit cards: PROS: - Are convenient for retail and online shopping - Can be used to build credit - Offer protection from fraud and loss - Can be used to pay for things that you couldn't otherwise afford - May earn you rewards CONS: - Often have annual fees - May require you to pay a high interest rate - Can create risk of overspending and going into debt d) Debit cards: PROS: - Are convenient for retail and online shopping - Are a convenient way to get cash from an ATM - Usually prevent overdraft - Usually tied to a checking account with no annual fees CONS: - Limit spending to funds available in associated account - Can create risk of being declined at point of use for insufficient funds

U1: What is the purpose of purchasing strategies? What are the 3 purchasing strategies? In what situations can they be used?

a) When you do need to make a purchase, there are lots of ways to make sure you don't overspend. For bigger purchases, it is wise to plan ahead and research your options. b) 1. Compare price per unit: Products like shampoo and toothpaste come in a variety of sizes. Purchasing a larger size can save you money in the long run because the price per unit is usually lower. 2. Look for sales and promotions: Buying products that are on sale can save you money. For example, phone manufacturers and service providers often run promotions that offer phones at a lower price. Search online for the best price. 3. Negotiate the price: Purchasing a used car or any pre-owned item offers an opportunity to negotiate on price. Often, the previous owner has a lower price in mind he or she might be willing to accept, but only if you ask!