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Alex GrellPersonal Finance- Final Exam Study Guide.Please fill in the following –using the power points on bettfinance. – you will be able to pick 10 things to write on your note card for the final. We will review it WednesdayTaxesIncome TaxPayroll TaxProperty TaxSales TaxExcise TaxPayroll tax Funds the Social Security and Medicare programs._______Property taxes_____ The fee to license a car us thus type f tax_______excise tax_____ A tax earned on earned and unearned income______sales tax______ The tax on airline tickets, cigarettes, and gasoline______income tax______ The tax determined by a set percentage of earned income_______sales tax______ The tax on goods and services_______Property tax______ The specific amount paid for this tax depends on many factors but increases as income increasesHow do taxes relate to the principle “You are better off being in a community than by yourself?to have multiple types of income paying for the things all the people use, like roads, streets signs and schoolsAs a persona living in the United States you are a tax payer. What are 2 benefits you receive from the taxes you pay?Some of the money comes back to you through things you get access to in your community and tax returnsWhat is the difference between earned and unearned income> Give at least one example of eachEarned: being employed somewhere. Unearned is something like babysittingGoalsWhat does SMART stand forSpecific, Measurable, Achievement, relevant, TimeBE able to write a SMART goalI want to have a handicap that is underpar or scratch and after playing golf at Blackhawk I want to play for a d1 school, I will practice 8 hours a day all summer. How can setting goals help create well-being?It gives you something to keep you motivated and have something to try to accomplishWay is it important to write down goals? You have something physical you can look atHow can goals help you manage your money? So you have specific amounts to save when you want to buy somethingDepository InstitutionsCredit UnionCommercial BankBoth_______Both____________ Anyone can open an account here___________Both_______ Offers financial services_________Commercial bank________ Owned by their customers__________Commercial banks_______ In business to make money_________credit union_________ Membership requirements to open an accountWhat are 2 benefits depository institutions can provide?Cash Back and some interestWhat would be the 3 most important factors would you consider when deciding which institution fits your needs?Interest rate, access to the money you put in, and Fees for having your money there.What are 2 ways depository institutions keep your money safe?It can keep it safe from yourself so you don’t spend it and What is the difference between a checking account and a savings account? Checking uses and credit card or debit when savings has a low interest rate and is there just to hold moneyTrue / False __T__ A debit card can be described as an electronic check that requires a PIN__F__ An overdraft fee may be charged if you exceed your checking account balance when using your debit card.___T__ One person can open accounts at more than one depository institution____T_ A person can earn and be charged interest__F___ All depository institutions are required by law to charge the same fees.Getting PaidNet IncomeDependentEmployee BenefitsPay StubTax Liability____net income_______ Total tax bill______Net income______ Amount of money left once all deductions have been taken from gross income____employee benefits _______ Products and services provided by an employer that adds extra value for employees beyond wages paid______dependent______ A person who relies on the taxpayer for financial support______Pay stub ______ Outlines deductions made to the wagesWho benefits more from being paid in cash: employer or employee? ExplainThe employee because you don’t have taxes taken outStacey is starting a new job at Hats-n-More. Inorder for her manager to know how much to withhold in federal income taxes, Stacey has to fill out which form?W2I9W41040ezSavings ToolsCertificate of depositChecking accountSavings accountMoney market account_____savings_________ A depository institution account that is designated to hold money not spent on current consumption______money market account________ An account at an institution that is used for a fixed period of time and allows restricted access to the funds deposited.______checking_______ An account at an institution that provides an easy method for withdrawing and depositing money._______cd______ An account at an institution that usually has a minimum balance requirements and tiered interest plete the chart below by listing the most liquid savings tool to the least.Most379317803201.checking account2. money market3. savings accounts Least4. CdsComplete the chart below by listing the savings tool with the highest interest rates to the lowest interest rate.Highest Interest379317803201.money market 2.cd3.savingsLowest Interest4. checking accountFundamentals of InvestingDefine each of the following types of investment tools. Indicate if it is a form of lending or owning.Investment toolDefinitionLending or owning?StocksBuying shares of a company so you own a percent of the companyOwning BondsYou are giving it to a certain company ot make you interestLendingMutual FundsGiving a company money to help it form its busness LendingWhat is diversification? Reducing non systematic risk buy investing in a variety of assetsWhich investment tool offers the best diversification? Stocks, Bonds, Mutual FundsBonds because they are saferWhat is the Rule of 72?Time it takes for your money to double when you are getting interestCredit Reports and ScoresOpen Ended CreditClosed Ended CreditCreditCredit ReportCredit HistoryLender__________Credit history___________ A Record of the borrower’s past loan and credit-related transactions______closed ended credit_____________ A loan of a certain amount of money that a borrower must repay in a specific number of equal payments.__________open ended credit_________ When goods, services and/or money is received in exchange for a promise to pay back a definite sum of money at a future date._______lender_________ A person of organization who makes funds available to borrow.Place an N on the line of the statement that will create negative credit; place a P on the line if the statement will create positive credit.__N__ Maintaining a reasonable amount of unused credit.__P__ Routinely paying bills late__N__ Numerous credit applications in a short period of time__P__ Checking credit reports annually to search for mistakes__N__ Having many of the same types of credit accounts (ex. Consumer)What is the ONLY free place to check your credit report?What are the 3 credit reporting agencies?Exparion, , List 3 ways a 20 year old may begin to build credit.Buy a car and pay the payments on time, get a credit card and never be late on payments, and pay student loans on time. Understanding Credit CardsAnnual FeeAPRBalance transfersCredit LimitsIntroductory RateLate Payment FeeOver the Limit FeePenalty RateVariable Rate APR_____Balance transfers______ transferring debt from one credit card to another______over the limit fee______ Charged if the account balance goes over the credit limit______credit limits_____ The maximum amount of charges allowed to an account_____ ______ The cost of credit expressed as a yearly interest rate_____Late payment fee ______ The interest rate that may be charged right after a credit card is opened_____annual fee______ A yearly fee that may be charged for having a credit card________late Payment fee___ Charged when the cardholder does not make the minimum monthly payment by the due date_____APR______ The interest rate charged on new transactions is the penalty terms in the credit card contract are triggeredIs a 13% or 18% APR for a credit card better? Why?13% because it is less interest How can a consumer avoid paying interest on a credit card?Pay off your amounts on time every timeWhat is the difference between a debit and a credit card?Debit is money that you have right now, credit is money the bank loans you that you have to pay back at the end of the monthIdentify 3 positive ways to manage your credit card. Never get to the limit, pay them buy the end of the month, always pay more than the minimumWhat is the typical liability for a cardholder for unauthorized charges on a credit card? A debit card?They have to cancel it if they cant pay for it but still have to pay back the interest. Debit card will just stop them from using it if there is no money in the accountPaying for Higher EducationDefermentFinancial NeedForbearanceGrantLoan DefermentScholarshipSubsidized LoanUnsubsidized Loan____financial _____ The difference between the cost of attending a particular school and the expected family contribution, minus any other financial aid_____Loan deferment______ Postponement of payment on a loan allowed under certain conditions when interest does not accrue.______subsidized_____ Money awarded to student that does not have to be repaid and is based on academic or other achievements_______unsusidized loan_____ Failure to repay a loan according to the agreed terms_____fobearance______ Stop or reduce loan payments for a short period of time while interest is accruing.______Grant______ A need based loan from the federal government, the interest of which is paid for by the US department of education while the borrower is in school and during grace and deferment periods.______scholarship________ A tax exempt financial aid that may be given for many purposes, not necessarily just for education.What is FAFSA? Application of student aid for collegeWhat are three documents you may need when filing the FAFSA?Student pin, social security card, drivers liscense. ................
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