Podcast Beta
Questions and Answers
What is the term for the total money one gets to 'take home' from a paycheck after taxes and deductions are taken out?
What form do employers use to determine how much tax to deduct from an employee's paycheck?
Which form provides employees with the total amount of money deducted from their paychecks throughout the year?
Which statement best describes gross pay?
Signup and view all the answers
Which of the following expenses can be paid as part of the escrow funds in a mortgage?
Signup and view all the answers
What document is required to open a bank account?
Signup and view all the answers
What additional cost must be considered when purchasing a product at a store?
Signup and view all the answers
How does a certificate of deposit (CD) differ from a traditional savings account?
Signup and view all the answers
Which investment is insured by the FDIC or NCUA and has the lowest interest rate?
Signup and view all the answers
What term describes interest earned on interest gained?
Signup and view all the answers
What type of financial institution primarily handles the safekeeping of money?
Signup and view all the answers
Using the simple interest formula $I = prt$, what is the interest earned on $150 at a 6% return after one year?
Signup and view all the answers
What is it called when a product or service is received now but paid for later?
Signup and view all the answers
Which of the following is not an example of an installment loan?
Signup and view all the answers
Which card removes funds from a checking account immediately after a purchase?
Signup and view all the answers
What advantage do credit unions generally have over banks?
Signup and view all the answers
Which expense is least likely to increase if the value of one's house rises?
Signup and view all the answers
What personal circumstance is NOT likely to affect federal income tax brackets?
Signup and view all the answers
Which type of insurance assists in covering medical expenses associated with short-term illness and accidents?
Signup and view all the answers
What type of insurance helps pay for stays in a nursing home?
Signup and view all the answers
What is a notable advantage of having a good credit score?
Signup and view all the answers
Which action could harm your credit score the most?
Signup and view all the answers
What is the primary purpose of an umbrella insurance policy?
Signup and view all the answers
What does 'balancing a checkbook' typically involve?
Signup and view all the answers
Which practice does not typically lead to a higher car insurance rate?
Signup and view all the answers
What term describes a person who relies on someone else financially?
Signup and view all the answers
What is the fee called when one spends more than is available in their bank account?
Signup and view all the answers
If someone identifies charges they did not authorize on their statement, they are likely a victim of what?
Signup and view all the answers
What does a variable expense refer to when planning a personal budget?
Signup and view all the answers
What is the Rule of 72 used to calculate?
Signup and view all the answers
What payment method allows a deposit with the item remaining unpaid until the balance is completed?
Signup and view all the answers
What is the term for when one party to a contract does not fulfill the contract requirements?
Signup and view all the answers
What is a disadvantage of rent-to-own agreements for consumers?
Signup and view all the answers
Which financial institution is specifically designed to provide cash for checks without requiring a traditional bank account?
Signup and view all the answers
Which financial institution is known for facing criticism due to high interest rates imposed on vulnerable populations?
Signup and view all the answers
What is the primary purpose of a safety deposit box offered by banks?
Signup and view all the answers
When dining out, which of the following is an additional cost that should be considered?
Signup and view all the answers
Investing in a commodity primarily involves investing in what?
Signup and view all the answers
If an individual cannot make a large down payment on a mortgage loan, they may be required to pay for what?
Signup and view all the answers
What is the typical length of time over which a borrower must repay a mortgage loan?
Signup and view all the answers
Which investment type is characterized as risky, offers ownership in a corporation, and has the potential for high rewards?
Signup and view all the answers
Study Notes
Understanding Paychecks
- Net pay is the amount of money an employee takes home after taxes and deductions are taken out.
- Gross pay is the amount of money an employee earns before taxes and deductions are taken out.
- Form W-4 is used by employers to determine how much tax to withhold from an employee's paycheck.
- Form W-2 is provided to employees by employers to show how much money was withheld for taxes during a given year.
Mortgages and Escrow
- Escrow funds are money held by a lender to pay property taxes and homeowner's insurance premiums.
Banking Basics
- A government-issued identification is required to open a bank account.
- Sales tax is an additional cost added to the price of a product at a store.
Credit Cards and APR
- APR (Annual Percentage Rate) is the yearly interest rate charged on a credit card.
Investments: CDs and Savings Accounts
- A certificate of deposit (CD) is a type of savings account where the money must remain untouched for a fixed period of time.
- CDs typically have higher interest rates than traditional savings accounts.
Bundling Insurance
- Bundling insurance involves combining different insurance policies, like home and auto insurance, into a single policy for potential savings.
Investment Options
- A traditional savings account is insured by the FDIC or NCUA, has the lowest interest rate of all investments, and may have limits on withdrawals.
- Compound interest is interest earned on interest that has already been gained.
Financial Institutions
- Banks are financial institutions that handle money, including keeping it safe for savings or commercial purposes.
Simple Interest Calculations
- Simple interest formula: I = prt, where I is interest, p is principal, r is interest rate, and t is time.
Credit and Debt
- Credit allows someone to receive a product or service now and pay for it later.
- Installment loans are loans repaid with regular payments over a set period of time.
- Debit cards remove funds from a checking account almost instantly after a purchase.
Credit Unions vs. Banks
- Credit unions are often owned by their members, who can vote and elect board of directors, and may offer lower interest rates on loans.
Mortgage Loans
- Government-insured loans are designed to help individuals with lower credit scores, smaller down payments, or who are first-time homebuyers.
Federal Interest Rates
- When the federal government raises interest rates, this typically has a positive impact on savings accounts and a negative impact on credit card payments, real estate investments, and stock investments.
Types of Insurance
- Life insurance provides income to people who depend on a wage earner after the wage earner dies.
- Health insurance helps cover medical expenses associated with short-term illness and accidents.
- Long-term care insurance helps pay for stays in a nursing home.
- Umbrella insurance provides extra liability coverage beyond what is covered by other insurance policies.
Car Insurance Factors
- Receiving a speeding ticket can lead to higher car insurance rates.
Personal Budgeting
- Variable expenses are those that may change in amount from month to month.
The Rule of 72
- The Rule of 72 calculates how long it will take for an investment to double in value.
Contracts
- Breach of contract occurs when a party does not fulfill the requirements of the contract.
- Order of contract formation: Offer, Acceptance, Consideration, Agreement.
Contract Signatures
- A notary public can confirm signatures to a contract.
Sales Tax Rates
- Sales tax amounts are generally established by state and local rates.
Home Value and Expenses
- When the value of a house increases, typically the house insurance, escrow payment, and property tax will also rise.
Federal Income Tax Brackets
- Marriage status can impact federal income tax brackets.
Benefits of a Good Credit Score
- A good credit score can increase the likelihood of receiving a loan with a low interest rate.
Practices that Negatively Impact Credit Score
- Reaching the spending limit on a credit account can negatively affect a credit score.
Checkbook Balancing
- Balancing a checkbook involves comparing bank statements to withdrawal records to track spending.
- Overdraft fees are charged for spending more money than is available in a bank account.
Fraud and Identity Theft
- Identity theft can occur when unauthorized charges appear on a banking or credit statement.
Layaway Plans
- Layaway plans allow customers to pay a deposit on an item and receive it after the balance is paid in full.
Bonds
- Bonds are investments where an investor loans money to a city, government, or company. The money is repaid on a certain date with interest. Bonds are generally considered a safe investment, but they are not insured by the FDIC.
Rent-to-Own Agreements
- Rent-to-own agreements can negatively impact consumers due to high interest rates.
Financial Institutions and Vulnerable Populations
- Payday lenders are criticized for charging extremely high interest rates, often targeting people in poverty and other vulnerable populations.
Safety Deposit Boxes
- Safety deposit boxes provide a secure place to protect personal documents from potential loss.
Restaurant Costs
- Tips are an additional cost to the price of a meal and sales tax at a restaurant.
Commodities
- A commodity is a natural resource that is traded on an exchange, like oil or gold.
Mortgage Loans and Insurance
- If an individual cannot make a large down payment on a mortgage loan, they often have to pay for private mortgage insurance.
Mortgage Loan Terms
- Most mortgage loans have a term of 30 years.
Stocks
- Stocks are a risky investment representing ownership in a corporation, which may pay dividends.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
Test your knowledge on key financial concepts such as net pay, gross pay, and the importance of government-issued identification for banking. Additionally, assess your understanding of credit cards, APR, and investment tools like CDs and savings accounts. This quiz is designed to help you navigate the basics of personal finance and banking.
