Personal Finance- Final Exam Study Guide.

Please fill in the following using the power points on bettfinance.weebly.com you will be able to pick 10 things to
write on your note card for the final. We will review it Wednesday
Taxes
Income Tax

Payroll Tax

Property Tax

Sales Tax

Excise Tax

_______payroll tax_____ Funds the Social Security and Medicare programs.

______property______ The fee to license a car us thus type f tax
_____excise_______ A tax earned on earned and unearned income
_____sales_______ The tax on airline tickets, cigarettes, and gasoline
_____income_______ The tax determined by a set percentage of earned income
_______sales______ The tax on goods and services
_____property________ The specific amount paid for this tax depends on many factors but increases as income
increases

How do taxes relate to the principle You are better off being in a community than by yourself?
Because in a community they help pay for the things like roads other than by yourself
As a persona living in the United States you are a tax payer. What are 2 benefits you receive from the taxes you pay?
Tax returns and
What is the difference between earned and unearned income> Give at least one example of each
Earned income you get more money back and uneared you get less money back.
Goals
What does SMART stand for
Specific, measurable, achievable, relevant, time orientated
BE able to write a SMART goal
I will buy a car with a 4000 dollar loan by working to pay it off in about 3 years
How can setting goals help create well-being?
You get used to those goals and it becomes easier for you
Way is it important to write down goals?
To remember them
How can goals help you manage your money?

Because you know how much you can save and how much you can spend

Depository Institutions
Credit Union

Commercial Bank

Both

_________both__________ Anyone can open an account here

_______both___________ Offers financial services
_______commercial__________ Owned by their customers
_______both __________ In business to make money
_________commercial_________ Membership requirements to open an account
What are 2 benefits depository institutions can provide?
Cash back, interest
What would be the 3 most important factors would you consider when deciding which institution fits your needs?
How much you can take out, minimum money in your account, interest rates
What are 2 ways depository institutions keep your money safe?
No pin code to copy, and there isnt a card
What is the difference between a checking account and a savings account?
Checking accounts are used for debit cards and savings accounts are used for saving and cash
True / False
__T__ A debit card can be described as an electronic check that requires a PIN
__F__ An overdraft fee may be charged if you exceed your checking account balance when using your debit card.
___T__ One person can open accounts at more than one depository institution
__T___ A person can earn and be charged interest
__F___ All depository institutions are required by law to charge the same fees.

Getting Paid
Net Income

Dependent

Employee Benefits

Pay Stub

Tax Liability

_____tax______ Total tax bill

_____net_______ Amount of money left once all deductions have been taken from gross income
______benefits_____ Products and services provided by an employer that adds extra value for employees beyond
wages paid
_____dependent _______ A person who relies on the taxpayer for financial support
____pay________ Outlines deductions made to the wages
Who benefits more from being paid in cash: employer or employee? Explain
Employee because tax isnt getting taken out
Stacey is starting a new job at Hats-n-More. Inorder for her manager to know how much to withhold in federal income
taxes, Stacey has to fill out which form?
a. W2
b. I9
c. W4
d. 1040ez
Savings Tools
Certificate of deposit

Checking account

Savings account

Money market account

_______savings_______ A depository institution account that is designated to hold money not spent on current
consumption
_____certificate________ An account at an institution that is used for a fixed period of time and allows restricted access
to the funds deposited.
_______checking______ An account at an institution that provides an easy method for withdrawing and depositing
money.
______money_______ An account at an institution that usually has a minimum balance requirements and tiered
interest rates.
Complete the chart below by listing the most liquid savings tool to the least.
Most
1.checking
2.money
3.certificate
Least
4.savings
Complete the chart below by listing the savings tool with the highest interest rates to the lowest interest rate.
Highest Interest

1.money market

2.cd
3.stock
4.mutual fund

Lowest Interest

Fundamentals of Investing
Define each of the following types of investment tools. Indicate if it is a form of lending or owning.
Investment tool
Stocks

Definition
Share in a company

Lending or owning?
owning

Bonds

Leaving money in a bank till 60 to gain interest

lending

Mutual Funds

Money in the company and they use it

lending

What is diversification?
reducing non-systematic risk by investing in a variety of assets.
Which investment tool offers the best diversification? Stocks, Bonds, Mutual Funds
bond
What is the Rule of 72?
Amount of months it takes to double your money
Credit Reports and Scores
Open Ended
Closed Ended
Credit
Credit

Credit

Credit Report

Credit History

Lender

________credit report_____________ A Record of the borrowers past loan and credit-related transactions
________credit___________ A loan of a certain amount of money that a borrower must repay in a specific number of
equal payments.
_______lender____________ When goods, services and/or money is received in exchange for a promise to pay back a
definite sum of money at a future date.
____opened ended____________ A person of organization who makes funds available to borrow.
Place an N on the line of the statement that will create negative credit; place a P on the line if the statement will create
positive credit.
_credit report___ Maintaining a reasonable amount of unused credit.

credit____ Routinely paying bills late

__credit report__ Numerous credit applications in a short period of time
__history__ Checking credit reports annually to search for mistakes
__credit__ Having many of the same types of credit accounts (ex. Consumer)
What is the ONLY free place to check your credit report?
Annualcreditreport.com
What are the 3 credit reporting agencies?
Annualcreditreport, freecreditscore
List 3 ways a 20 year old may begin to build credit.
Take out a small loan, pay payment on time, oay off sooner then suppopse
Understanding Credit Cards
Annual Fee

APR

Balance
transfers

Credit
Limits

Introductory
Rate

Late
Payment
Fee

Over the
Limit Fee

Penalty
Rate

Variable
Rate APR

____balance transfers_______ transferring debt from one credit card to another

____penalty rate________ Charged if the account balance goes over the credit limit
____credit limits_______ The maximum amount of charges allowed to an account
_____APR_____ The cost of credit expressed as a yearly interest rate
_____introductory rate______ The interest rate that may be charged right after a credit card is opened
_____annual fee______ A yearly fee that may be charged for having a credit card
_____late payment fee______ Charged when the cardholder does not make the minimum monthly payment by the due
date
____variable rate APR_______ The interest rate charged on new transactions is the penalty terms in the credit card
contract are triggered
Is a 13% or 18% APR for a credit card better? Why?
13 because that rate interest isnt as much

How can a consumer avoid paying interest on a credit card?

What is the difference between a debit and a credit card?

Debit comes right out of your bank account and a credit card you pay at the end of your bill cycle
Identify 3 positive ways to manage your credit card.

Pay on time, dont spend as much, pay more

What is the typical liability for a cardholder for unauthorized charges on a credit card? A debit card?
Over amount payment fee

Paying for Higher Education

Deferment
Financial
Forbearance
Need

Grant

Loan
Deferment

Scholarship

Subsidized
Loan

Unsubsidized
Loan

___deferment_______ The difference between the cost of attending a particular school and the expected family
contribution, minus any other financial aid
___grant________ Postponement of payment on a loan allowed under certain conditions when interest does not
accrue.
____scholarship_______ Money awarded to student that does not have to be repaid and is based on academic or other
achievements
_____loan deferment_______ Failure to repay a loan according to the agreed terms
______forbearance_____ Stop or reduce loan payments for a short period of time while interest is accruing.
_____subsidized_______ A need based loan from the federal government, the interest of which is paid for by the US
department of education while the borrower is in school and during grace and deferment periods.
________unsubsidized______ A tax exempt financial aid that may be given for many purposes, not necessarily just for
education.
What is FAFSA?
Student aid
What are three documents you may need when filing the FAFSA?
Social security, birth certificate, ID