| A | B |
|---|
| Standard of Living | The lifestyle that you want or hope to have. Knowing this helps you to determine what income level and career you might need to support your lifestyle. |
| Wealth | The amount of assets a person accumulates over a lifetime |
| Needs | Things necessary to sustain life |
| Wants | Things that we desire to make life easier, more satisfying or comfortable |
| Trade Off | Making a choice to do or have something means not being able to do or have something else. For example, On Saturday you can either go to the movies or go bowling. If you choose the movie then bowling becomes the trade off. |
| Resource | What we use to satisfy our needs and wants. Resources can be Time, Energy, Money, Knowledge, Skills, Natural Resources or places like Libraries, Schools and even other people. |
| Why does a person with a college degree have the opportunity to earn more money than a person with a high school degree | A college degree offers increased problem solving ability, more training, broader range of skills, etc. |
| Opportunity Cost | The cost involved in what you gave up in order to make a choice. For example, you have saved for months to buy a cell phone. An opportunity came up to go a paint ball competition. If you spend money to play paint ball then the opportunity cost becomes the cell phone. |
| Family influences on career choices | You may follow your relatives into the same career choice, a parent may discourage you from a career choice, having children may limit the number of hours you work, a husband may ask that you have a career that does not involve travel. |
| Jamie has a monthly income of $2, 000. If he pays 28% in taxes what is his net income? | Taxes equal $560 ($2000x.28). So your after taxes income would be $1440.00 ($2000-$560) |
| The four steps of the budget planning process | 1. Identify goals, 2. Record Income, 3. Determine Expenses, 4. Develop a Savings Plan |
| The three factors that affect how money grows are? | 1. Time Invested, 2. Interest rate, 3. Initial amount invested |
| Risk | The possibility of loss |
| Principal | The amount of money you contribute or deposit into an account. |
| Inflation | The rise in price of goods and services over time. |
| Interest | The cost of borrowing money, OR, a fee paid to you for allowing a financial institution to use your money |
| Certificate of Deposit | You deposit a required amount of money for a predetermined length of time. You have limited access to funds; the interest rate is locked in for the length of the CD. Interest rates typically are higher than savings and checking accounts |
| Savings Bond | Savings Bonds are someone else’s debt. Only certain corporations or forms of government can sell bonds. You purchase the debt (Bond) of a business or government and in return they pay you interest over time. You may be able to purchase a bond for half of its face value but must wait a period of time for it to accumulate interest and reach its face value or maturity. |
| Money Market Deposit Account | Highest amount of interest rate received, have access to funds but there are conditions. Usually must have a minimum balance and withdrawals are usually for larger amount and restricted in number |
| Savings Account | An account where money is kept for future needs. Recommended amount of income to save is 10% |
| Checking Account | An account used to manage money for wants and needs. May not offer interest. Helps you keep a record of expenses. |
| Bounced Check, Overdraft, Non-sufficient Funds | Terms referring to when a person writes a check for an amount that is for more money than they have in their account |
| ATM Card | A device that allows you to withdrawal money from your account even when the bank is closed |
| Debit Card | A device that allows you to purchase goods and services from a business, and electronically transfers the money from your account and deposits it into the account of the business. |
| Check Register | A small booklet used to keep track of checks written, dates of purchases, places you spent money, ATM withdrawals, Debit card purchases and current balance. |
| Signature Card | A file card held by the bank that you sign so that the bank can verify your signature on a check in case that they suspect fraud or identity theft. |
| Shareholder | A person who owns stock in a company |
| Commission | A fee you pay a stock broker to buy or sell your stocks |
| Trade | The act of buying or selling stocks |
| Dividend | A portion of the company's profit paid out to investors. Usually this is paid quarterly or 4 times a year |
| Capital Gain | The profit made on a stock. The amount over and above what you paid for the stock |
| Stock Quote | The current selling price of a share of stock. The price of a stock or “quote” can change rapidly…It is not unusual for this to occur within seconds of the last posted quote. |
| Stock Symbol | The 2-4 letters assigned to a company that are used to identify that company’s stock on the stock market. |
| 401 K | A retirement account you can invest in through your employer. Payments to your 401 K are deducted from your paycheck before taxes are taken out. You will pay taxes when you withdrawal money from the account during your retirement. One advantages of this account is that you may be taxed at a lower rate when you retire. |
| Mutual Funds | A collection of stocks kept together as a package, bought by many individuals. You can buy in or sell your mutual fund at any time but you must go through a broker. |
| IRA | An individual retirement account you may invest in on your own. The government places limits on how much you can contribute to an IRA. Different IRA’s have different tax advantages / disadvantages. |
| Benefits of Checking Accounts Are | Safer than mailing or carrying cash, helps you build a credit rating, allows you to cash checks without a fee, a way to obtain a an ATM or Debit card |
| Portfolio Diversification | 1. Reduces Risk, 2. Reduces investment anxiety, 3. Protects the value of your investment portfolio |
| Good Credit | With a High FICO score you qualify for loans, get the lowest interest rates on borrowed money, able to buy big ticket items on credit, book a vacation on line, reserve a hotel room and even rent a car. |
| Bad Credit | With a Low FICO score you: pay higher interest on loans if you can even get them, may be prevented from getting a job, are not able to buy a home, do not qualify for credit cards, may be denied rental property. |
| Credit Cards vs Charge Cards | Credit cards allow you to carry a balance and pay off over time. A charge card doesn't allow you to carry a balance. You must pay it off every month. |
| Credit Card Features | Annual Fee?, interest rate, minimum payment calculation, grace period, penalty fees like late payments, bonuses like cash back, reward points, airline miles etc. |
| Disadvantages of making minimum payments on your credit card balance | Pay a lot more interest, greatly lengthens the time it will take you to pay off the balance, easy to run up and lose control of your debt and go over your limit |
| Smart Credit Card Habits | 1. Charge only what you can afford to pay off each month. 2 If you can't pay the balance in full pay as much as you can afford. 3. Make payments before the due date to avoid paying interest. 4 Limit the number and kinds of credit cards you have. |
| Reasons to have a credit card | 1. Emergencies 2. Buy an item now and pay for it later. 3. Buy big ticket items without carrying cash 5. Buy items on line 6. Easier to book a vacation or rent a car. |
| Finance Charge | The fee for getting a loan or using a credit card Usually this charge contains interest payments |
| Credit Rating | Your credit worthiness. A numerical score established by past history of borrowing and repayment (late, on time or not at all) You rating is influenced by The amount of debt you have in comparison to your income. How many active credit accounts you have. |
| Protect Yourself against identity theft | 1. Shred documents containing financial information 2. Shred credit card offers that come in the mail 3.Protect your social security number and don't carry your SS card / number with you 4. Don't disclose your pin numbers to anyone 5. If you must use your credit card on the internet make sure you have a secure link 3. Don't use your debit card on line. Watch out for scams, phishing and debit card scanners |
| What to do if you are a victim of identity theft | 1. Notify the police by filing a report 2. Close your accounts 3. Contact the three credit reporting agencies 4. Contact your creditors whose accounts have been affected |
| Inflation and Purchasing Power | As inflation raises the dollar buys less and less |
| Benefits of Advertising | Lets you know of new products, product features, provides examples of how to use the product, may provide educational information |
| Who regulates Advertising? | Federal Trade Commission |
| Rain Checks Are ???? | When a store sells out of an advertised item they can issue a rain check or coupon to purchase the item at the advertised price on a future date |
| Before you go buy..... | Ask yourself what features do you need / want, are there other brands, what is the store and brand reputation, what is included in the warranty, are there any hidden charges such as installation / activation/ finance charge / delivery charge |
| Sources of information beneficial for researching a purchase | Better Business Bureau, Consumer Reports Magazine, Good Housekeeping Magazine, Experts who use the product |
| Benefits of Comparison Shopping | 1. Best price 2. Best Warranty or Guarantee 3. Find product that best fits your wants and needs. 4 Find the store that offers the best service / information / after the sale help (repairs or problem solving. |
| Right to be Safe | You have the responsibility of using the product as intended, in a safe manner, and to follow all safety guidelines |
| Right to Choose | It is your responsibility to select products and services carefully |
| Right to be Informed | It is your responsibility to seek out information and to report misleading information |
| Right to be Heard | It is up to you to express your likes and dislikes about products and services |
| Who is the Attorney General | Represents the State of Ohio in legal actions and enforces fair business practices. The Attorney General's office investigates consumer complaints and takes action on behalf of all consumers. |
| New Gift Card Rules in Ohio | 1. Gift Cards can not expire 2. Companies can not charge a fee before the card is used |
| Refund Policy | The terms and conditions you must meet in order to obtain a refund or exchange for unwanted or damaged merchandise. Things to consider before you purchase are: a) do you need a receipt; b) will you receive cash or store credit; c) Is there a time limit to return the merchandise |
| By law most contracts can be canceled within..... | 3 business days |
| Is an Extended Warranty worth the cost? | Most consumers find the added protection unnecessary and ultimately useless. |
| Liquidity | Converting an investment to cash. The easier it is to convert to cash "the more liquidity" an investment has |
| Assets | Anything that has value that can be converted to cash. Property, stocks, cars, jewelry etc |
| Liabilities | Something that detracts from your wealth. Credit card Bills, car payments, loans and bills are examples of liabilities |
| If you are spending more than your income, what are several things that you can do? | 1) cut back on spending 2) work additional hours to increase income |
| Credit Bureau | One of three agencies that collect information on a person's past use of credit and sells it to other companies and lending institutions |
| Rule of 72 | A simple calculation that tells you how long it will take to double your money. You need to know either the interest rate or the length of time you have to invest. If you know the interest rate you can determine the number of years it will take. If you have the amount of time you want to invest, then the formula will tell you the interest rate you need to find. |
| If you invest 100 at 10% interest how much will you have after two years if the interest is compounded annually | 1st year: $100 + $10 interest equals $110, 2nd year: $110 dollars plus $11 interest equals $121.00 |
| Advantages of Credit | 1) Shop now pay later 2) Divide big ticket items into smaller payments to pay off over time 3) use the other people’s money to purchase things so you can use your money for other things until the due date. 4) Some credit cards offer reward points or cash back on purchases. 5) Provides money in case of emergencies. |
| Disadvantages of Credit | 1) easy to lose track of how much debt you are accumulating 2) Purchases become more expensive because you have to pay interest if you don't make timely payments or if carry a balance from month to month on credit cards 3) Credit makes it harder to resist impulse purchases. 4) Debt is one of the greatest causes of frustration, unhappiness and problems in relationships. |
| Single Payment Credit | Typically you are billed each month for a service you have used for the month like utility bills, doctor bills, cell phone bills |
| Installment Credit | You are granted credit and agree to pay it back making monthly payments of the same amount over a set period of time. Car payments, small loans, and store accounts that financed the credit directly like making regular payments at a jewelry store toward a piece of jewelry you bought. |
| Revolving Credit | Store credit cards, Master card and Visa are several examples of revolving credit. You make a purchase, make payments, make another purchase, pay it off, and so on and so on |
| Permanent Credit | Example: Home equity loan. You are extended credit based on how much you have paid on your home or property. You apply one time but can get loan after loan up to a certain amount as long as you have a good repayment history. |
| Reporting Lost or stolen Credit cards | Lost or stolen credit cards should be reported immediately |
| Debit card vs Credit card | Debit cards are linked directly to your bank account. At the time of purchase the money is automatically withdrawn from your account and deposited into the business's account. A credit card in not linked to your bank account. You are allowed to carry a balance, make payments and a credit card has a grace period where you can use the product or service before payment is due. You receive a monthly bill of your credit card charges to be paid; whereas debit |
| Fixed Expenses | This type of expense is the same amount each time you make a payment. Examples include loan payments, insurance payments, car payments, mortgages or rent. |
| What does APR stand for? | Annual Percentage Rate. An interest rate that is expressed as a yearly amount instead of a monthly rate. |
| Grace Period | The time between when a good or service is purchased using a credit card and the date interest is charged to the amount of purchase. A grace period typically is between 15 - 25 days |
| Direct Deposit | Occurs when you give an employer your bank account number and they put your paycheck amount directly into your savings or checking account |
| Your Credit worthiness is determined by..... | 1) past history of credit and how you repaid it. 2) Your percentage of debt compared to your income |
| When you buy a share of stock, what actually happens? | When an investor buys stock in a company they actually own a portion of that company. The more stock you buy the greater the percentage of the company you own. Keep in mind that there could be millions and millions of shares of stock in any one company so you actually own an insignificant amount of the company. |
| How is a credit history built? | 1) Be employed 2) Apply for a lower limit credit card, use it and make payments in full AND on time 3) Pay your bills on time 4) Maintain a checking account in a responsible manner ( don't make overdrafts) |
| What is "phishing?" | Telemarketers, internet sites and scammers send out communications hoping that you will respond and give them your personal information or your financial information. |
