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econ midterm
| Question | Answer |
|---|---|
| What information do you need to know to understand your personal finances? | Income, goals, plan to reach goals |
| ___________ is something that takes away from your financial peace and sense of hope for the future. | debt |
| Why is it important to track your expenses throughout the month? | Make sure you are sticking to your budget |
| How can budgeting help you? | Gives you control over your money |
| Personal finance is 20% knowledge and 80% ____________ | behavior |
| What is the first foundation of personal finance for high school students? | Save $500 for an emergency fund |
| What are the 3 main reasons why you should save your money? | Emergencies, large purchases, wealth building |
| What are three examples of variable expenses? | Electric, groceries, gas |
| Building wealth ultimately comes down to what two things? | Investing consistently and time allowing it to grow |
| True/False Paying with a debit card typically leads to overspending | false |
| True/False Most people pay their credit card off in full every month | false |
| What does it mean to live on less than you make? | Keep your expenses below what you make per month and save |
| How can you fund a college degree without taking on debt? | Scholarships, grants, work study, cash flow |
| A budget doesn’t tell you not to spend, it actually gives you ____________ to spend money on the things you want/need. | Permission |
| What are the 4 components of a budget? | Income, giving, saving, expenses |
| Who makes decisions about personal finance? | Individuals and families |
| Credit cards became available after World War I and now they are ____________ acceptable in today's society. | socially |
| What is the formula to calculate your net worth? | Assets - Liabilities= net worth |
| List the four types of expenses and define them. | Fixed- Same amount each month Variable- Pay each month but the total varies Discretionary- Non-essential spending Intermittent- Not every month but comes at certain times every year |
| List an example of an appreciating asset and a depreciating asset. | Appreciating- House Depreciating- Car |
| If your assets total more than your liabilities, you have a __________ net worth | Positive |
| What does living paycheck to paycheck mean? | Income is used solely for expenses, little to no savings |
| Give at least two examples when it would be appropriate to use your emergency fund. | Car tire is blown, A/C stops working |
| When setting financial goals they should be what 5 things? | Specific, measurable, time-sensitive, yours, written down |
| What are your 4 walls? | Food, Utilities , Shelter, Transportation |
| How often should you create a budget? | monthly |
| What is it called when you buy something that you did not plan for? | Impulse buy |
| What is gross income? | Total amount of money before taxes |
| What is your biggest tool to build wealth? | income |
| What is the average rate of growth of an investment over time called? | Compound Growth |
| What factors determine your credit score? | History of debt and payments |
| The _____________ is the total amount of the car loan, plus taxes and fees | Principal |
| The amount of time you have to pay back a loan is called? | term |
| What is the debt snowball method? | Debt payment plan- Make minimum payments on all debts beside the smallest (pay Extra), once the smallest debt is paid off rollover that payment to the next smallest debt. Repeat until all debts are paid off. |
| What are the three components of compound growth? | Time, Money, Rate of return |
| What are the two types of markets called? What do they mean? | Bull (Markets going up and expected to continue) and Bear (Market is experiencing loses for a prolonged time) |
| What is the difference between a roth and traditional IRA? | Roth you deposit money post tax and withdraw money tax free during retirement Traditional deposit money pre tax and pay taxes on withdrawals during retirement |
| Who technically owns your house when you have a mortgage loan? | the lender |
| What is the biggest depreciating asset most people have? | a car |
| What is the difference between a cash-flow statement and a budget? | Cash-flow is where your money has gone in the past, budget is where your money is going to go this month |
| State the difference between a subsidized and an unsubsidized loan? | Subsidized- No interest until 6 months after you graduate Unsubsidized- Interest accrues right after signing |
| How are ETFs and mutual funds similar? | They are both a collection of assets that help you diversify your investment portfolio |
| On average how long does it take people to pay back student loans? | 20 Years |
| True/ False You still have to pay back student loans even if you drop out. | True |
| Why is it important to think about what you want to do with the rest of your life before going to college? | Don’t go into unnecessary debt for a degree that won’t be used, or take unnecessary classes |
| What is collateral for a loan? | When you offer something else to secure the loan. Problem is you can lose more than just the item you took a loan out for. |
| What are the three ways to get free money to help pay for college? | Scholarships, grants, work-study |
| What should you start with when budgeting with an irregular income? | Expenses |
| What are the three types of financial goals? | Short- up to 2 years, Medium- 2-5 years, Long 5+ years |
| Define inflation. | General rise in price over all goods and services over a period of time |
| Why should you get your free credit reports every year? | Make sure no accounts were opened in your name without your consent |
| List at least three types of fees associated with credit cards. | Interest, Cash advance, annual, over the limit, late, merchant |
| Define opportunity cost? | What you give up when you make a choice; next highest valued alternative |
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