Questions and Answers
What is a 401K?
What does a 403(b) plan cater to?
What is the purpose of a 529 Plan?
To encourage savings for future costs of higher education.
Define 'Advertising'.
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What is an amortization table?
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What does APR stand for?
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What is a Bank?
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Define 'Bankruptcy'.
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Who is a Beneficiary?
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What are Benefits in employment?
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What is a Budget?
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Define 'Career'.
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What is a Certificate of Deposit (CD)?
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What are Charitable Contributions?
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What is the Chex Systems?
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What are Closing Costs?
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Define Co-signers.
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Study Notes
Financial Literacy Terms
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401K: Qualified employer-sponsored retirement plan allowing post-tax and pre-tax salary deferral contributions; includes potential employer matching and profit-sharing features with tax-deferred earnings.
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403(b): Tax-advantaged retirement savings plan available for public education organizations, certain non-profits, and self-employed ministers; designed for specific non-profit entities under Internal Revenue Code 501(c)(3).
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529 Plans: Nonprofit college savings plans like the Utah Educational Savings Plan (UESP) that offer tax advantages for saving for higher education costs; open to non-Utah residents.
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Advertising: The practice of promoting products or services to create consumer interest by highlighting appealing qualities.
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Amortization Table/Schedule: A detailed schedule showing the breakdown of each payment into principal and interest components.
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Annual Percentage Rate (APR): The yearly cost of borrowing expressed as a single percentage; includes interest and any additional fees related to loans.
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Bank: Licensed financial institution for receiving deposits, categorized as either commercial/retail banks or investment banks; typically regulated by national governments.
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Bankruptcy: Legal process initiated by individuals or businesses unable to repay debts; can be filed by debtor or creditors.
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Beneficiary: An individual who is designated to receive benefits or payments, such as insurance funds.
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Benefits: Non-wage compensations provided to employees beyond salary; can include housing, insurance, disability protection, retirement contributions, and more, often aimed at enhancing job security and retention.
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Budget: A financial blueprint for estimating and monitoring income and expenses over a period.
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Career: A trained profession or field of employment, such as in finance or healthcare.
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Certificate of Deposit (CD): A time deposit issued by banks with a fixed interest rate and specified maturity date; ranges from one month to five years, and insured by the FDIC.
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Charitable Contributions: Donations made to organizations aimed at benefiting society rather than individual profit.
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Chex Systems: A nationwide network of financial institutions that tracks closed checking and savings accounts, sharing data to assess the risk of new account openings.
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Closing Costs: Fees incurred during the closing of a real estate transaction, applicable to either buyer or seller at the point of title transfer.
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Description
Test your knowledge on financial literacy with these flashcards, specifically focusing on the 401K plan. Understand key terms and definitions that are critical for managing personal finances effectively. Ideal for students preparing for the Financial Literacy State Test in Utah.
