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Questions and Answers
What is the term for the cost of one item or measurement that allows easy comparison to other products?
What is the purpose of a credit counselor?
What is the result of long-term failure to repay a loan according to the terms agreed to?
What is the term for a three-digit number based on an individual's credit history?
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What is the method of debt repayment that prioritizes paying down debts with the smallest balances first?
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What is the term for a company that collects and sells information about how individual people manage their credit?
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What percentage of income is allocated to savings and debt repayment in the 50/30/20 budget financial plan?
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What is the term for the money left over after deductions are taken from gross pay?
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What type of expense remains the same amount at regular intervals?
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What does the term 'cost of living' refer to?
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What is the term for automatically saving a specified amount from your paycheck before budgeting it into any other category?
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What is the term for items subtracted from your paycheck, including state and federal income taxes, Social Security, and health insurance or 401(k) contributions?
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Study Notes
Budgeting
- 50/30/20 Budget: Allocates 50% of income to needs, 30% to wants, and 20% to savings and debt repayment
- Budget plan: Expected income and expenses over a period of time
Expenses
- Fixed Expense: Cost that can be expected at regular intervals and remains the same amount (e.g., monthly rent payment)
- Variable Expense: Cost that appears irregularly or changes in amount (e.g., utility bills)
Income
- Gross Pay: Total earnings before deductions
- Net Pay: Total earnings after payroll taxes and other deductions
- Salary: Fixed amount of money paid to an employee for each pay period
- Wage: Amount of money paid to an employee at a specific rate per hour worked
Credit Management
Credit Terms
- Annual Percentage Rate (APR): Interest rate charged on unpaid balance
- Bankruptcy: Legal process that relieves debtors of paying debts or protects them while repaying
- Collections: Attempted recovery of past-due credit obligation or debt
- Credit Bureau: Company that collects and sells information about individual credit management
- Credit Counselor: Certified advisor who helps consumers repay debt responsibly
- Credit History: Record of an individual's credit use over time
- Credit Report: Document containing financial information on credit obligations
- Credit Score: Three-digit number (300-850) based on credit history
- Credit Utilization Rate: Measurement of outstanding debt divided by total available credit
- Debt Snowball Method: Repayment method prioritizing smallest balances first
- Default: Failure to repay a loan, negatively impacting credit score
- FICO Score: Most commonly used credit score
- High Rate Method: Repayment method prioritizing debts with highest interest rates first
- Net Worth: Assets minus liabilities, also called wealth
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Description
Test your knowledge of personal finance concepts, including budgeting, cost of living, and deductions. Learn how to manage your money effectively and make smart financial decisions. Improve your understanding of financial planning and budgeting strategies.
