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1LS Personal Finance

LS Personal Finance Final Review

QuestionAnswer
What do Financial advisors say will give you a 90% better chance of reaching goals? Write goals down
A well written financial goal includes what elements? Specific, measureable, attainable, realistic, time-bound
What protects a customer against loss at a financial institution? FDIC insurance
What has Check 21 done for electronic banking? Instantaneous electronic banking
What medical information is found on a consumer's credit report? Information regarding late medical payments
On average, what is the largest major expenditure? Housing
What financial tool assists the individual with reaching financial goals and helps track where their money is going? Spending plan
What is the least secure method for an employer to pay the employee? Mailing printed paychecks
Does the government provide to health insurance for most American workers? The American government does not provide health insurance to employed people.
What 2 types of insurance are included in a homeowner's policy? Property and liability
What do goals help people focus on? Important things keeping the end in mind
What is the relationship between values and financial decisions? Because values are influenced by family, friends, and experiences, they affect a person's financial decisions.
How do financial decisions influence a person's interpretation of needs and wants? By recognizing needs and wants, they guide a person's decisions
Identify a non-contractual (flexible) expense? Eating out
What is the function of the Federal Deposit Insurance Corporation?
What is the best way to handle job interview questions about your weaknesses? Discuss a weakness you had, but have now overcome
What category of expenses does food fit in? Cost of living expenses
What are some specific deductions taken from a person's paycheck? Federal withholding tax, state withholding tax, and FICA
Is developing a spending plan a one time process? Developing a spending plan is a continual process because it will change with an individual's or family's financial situation
According to the time value of money, how does the power of time benefit an individual? Money paid out or received in the future is not equivalent to money paid out or received today.
What does "pay yourself first" mean? An individual should consider savings to be a fixed expense
How does electronic banking benefit customers? Electronic banking allows customers to perform transactions via electronic funds transfers 24 hours a day.
What accounts are unique to a credit union? Share accounts and share draft accounts
Name an ATM safety tip. Shield the screen from on lookers
What is the primary purpose of a checking account? Help manage money and make paying bills more convenient
Why is Regulation E implemented by the Federal Reserve? Combat the security issues of online banking
What is an advantage of using credit? Not having to carry large amounts of cash
Name an example of identity theft. An individual who uses another's personal information to opne an account.
What should a consumer do if they are a victim of identity theft? Call all majoy credeit bureaus to request a "fraud alert" be put on file.
How can an individual protect their social security number which is the key number to their identity? Obtain alternate numbers on driver's licenses, insurance cards or other financial materials.
What are two out-of-pocket costs of being insured? Deductible and premium
What do people transfer when they buy insurance? Part of the risk of financial loss to the insurance company
What does disability insurance replace? A portion of one's income if they become unable to work due to illness or injury.
If a person plans to put a purchase on a credit card that will take them five months to repay, what is it important for them to consider when choosing a credit card? Low annual percentage rate for purchases
If a person needs to borrow cash from a credit card, what is it important for them to consider when choosing a credit card? Low percentage rate with a low minimum fee
What is the relationship between risk and return? The higher the possible return, the higher the risk
What does an individual have to accept to increase the potential rate of a higher rate of return on their investments? A growing risk to their capital invested
How should a person work toward a goal of buying a home? Create a financial plan to save up for the down payment and other housing costs which may mean cutting current expenses to save money.
What is most important to remember about a housing lease? The terms of a lease agreement are legally binding.
What is a security deposit? Money paid prior to moving into a living space to the landlord or the property manager to be used for repairs or damage to the space beyond wear and tear expected.
What is the maximum amount an individual should pay for a home? Two and one half times his/her annual household income
If a driver has liabilbity insurance on their vehicle and were involved in accident that was their fault, what would their insurance cover? Injuries to the other driver and damages to the other driver's vehicle
What makes a new vehicle considered a "lemon"? Remains unfixed after four repair attempts
If exspenses exceed income on a spending plan, what would be a financially smart solution? Decrease expenses
Explain the liquidity of saving and/or investing? Savings are generally considered more liquid and easily accessible
What form(s)must be completed when and employee starts a new job in order to receive a paycheck? W-4 and I-9
What is the approximate amount deducted from the paycheck for taxes? 31%
At which stage of the Personal Financial Management Pyramid is the process of writing SMART goals coarried out? Every stage
What are the three stages of the financial life cycle? Basic wealth protection, wealth accumulation, and wealth distribution
What is the purpose of a cover letter? Get an interview
Why is investing in human capital for career development important? An investment in one's human capital lasts a lifetime.
What does a person lose if they receive their pay for their job in the form of a payroll card, and the card is lost or stolen? The individual may lose only $50 because of the Regulation E or Electronic Funds Tranfer Act
If no payment is made on a debt with an interest rate of 8%, according to the Rule of 72 when will the debt double? 9 years
If you suddenly acquired $500 and wanted to save the money to be used for a specific purpose in five years, what type of cash management tool would be the best option? A certificate of deposit because it would be for a specified time length
Beau discovered charges that he did not make while reviewing his credit card statement. What is the first thing he should do to resolve the theft? . Contact the credit card company immediately
At 18 years old you applied for credit for the first time. Your credit application was declined because you had no credit history. What could you do to begin to build a positive credit history? Obtain a secured credit card
Define deductible. Amount paid by the policy holder for an agreed upon pportion of loss
Define stock. A share of ownership of the assets and earnings of a company.
Define credit report. A record of an individual's credit history.
Define net worth. Amount of money left when liabilities are subtracted from assets.
Define phishing. When internet scam artists use either pop-up messages or emails to lure people into giving personal information.
Define inflation. Steady rise in the general level of prices
Define collateral. An item promised to the lender if the borrower does not pay back the loan
Define broker. A person licensed to buy and sell stocks and provide investrment advice.
Define premium. Discounted savings tool purchased for 50% of the face value from the US government
Define mutual fund. A company combines the funds of many different investors and then invests that money in a diversified portfolio of stocks and bonds
Define savings bond. A type of debt that a company issues to investors for a specific amount of time.
Define generic brand. Items that have less fancy packaging and are cheaper because they are not advertised.
Define diversified portfolio. Spreading investment money among a wide array of investment tools that will provide an acceptable return with an acceptable exposure of riswk
Define tiered interest rate. The amount of interest earned depends on the account balance
Tom is working for a grocer. He earns $8.00 an hour, works 40 hours a week, and gets paid every 2 weeks. He pays $63.08 into federal withholdings, $33.21 into state withholdings, and $42.05 into FICA withholding. Tom's gross pay on his paycheck is $640.00.
Tom is working for a grocer. He earns $8.00 an hour, works 40 hours a week, and gets paid every 2 weeks. He pays $63.08 into federal withholdings, $33.21 into state withholdings, and $42.05 into FICA withholding. Tom’s net pay on his paycheck is $363.32.
You made a mistake on your checking account recordkeeping and spent $10 more than you had deposited in this account. As a result, you can expect to be charged an: Overdraft Fee
Tessa's net income is $1500 per month and her total expenses equal $1200. What is the minimum amount of money she should keep in a liquid asset emergency fund? $9,000
What is the component that determines the majority of your credit score? Outstanding debt
Define savings tools. Secure and liquid accounts offered by depository institutions assisting in the management of a savings fund
Define withholding allowance. Determines the percentage of gross pay which will be withheld for taxes
Define APR. Annual Percentage Rate
Define financial goal. Specific objectives that are accomplished through financial planning.
If you are going to the beach in one year and need to save $1,000, what would be the best savings or investment tool for you to use? CD
The terms of your automobile insurance policy are 20/50/10. If you were in an accident involving 3 people having bodily injuries, what is the maximum the policy would pay per person for bodily injury $20,000 per person with a maximum of $50,000
Define iability insurance. The minimum amount of automobile insurance required by law
What does the spending plan encompass? Future money management plan
What occurs as you move up the investment pyramid? Risk increases
If you are going snow skiing in six months and need to save for the trip, what would be the best savings or investment tool for you to use? Savings account
What formula is used to calculate net worth? Total Assets - Total Liabilities = Net Worth
Differentiate between assets and liabilities. Assets are everything owned of value and liabilities are everything owed to others.
Created by: vpowell