Financial Literacy Test Review 2015
- A Month in the Life
Concepts: Budgeting; Income and Wealth; financial choices; setting goals; pay yourself first; saving; spending
- Goal
- Budget Sheet
- Assets(own) and Liabilities (Expenses or debts)
- Pay Yourself First
- Wages, Salaries; income
- Wealth (Net Worth)
- Balanced, Surplus, Deficit Budgets
- Factors that influence the accumulation of wealth: Income; Expectations; Current interest rates; taxes
- Expenses
- Variable Expenses
- Periodic Expenses
- Fixed Expenses
- From Dreams to Reality
Concepts: Investment Saving
(investing= allocating money to use in a venture that offers the possibility of increased value as interest, income or worth)Check out the following before you put your money into any of these investments: Safety(FDIC) , Rate of Return(stock, market risk, inflation;principal) , Liquidity(how easy does it convert to cash)
Loan Own
Low risk High Risks
Income Investments Growth Investments
Usually Short -Terms Usually Long- terms
Savings Account(loaning money to a financial institution) / Stocks (owner)
(owning part of a company)
U.S. Savings Bonds (creditor)
(loaning money to the federal government) / Real Estate
(owning property)
Certificates of Deposit
(loaning money to a financial institution) / Collectibles
(owning material items)
Money Market Deposit Account
(MMDA or CMA)
Loaning money to a financial institution / Mutual Funds
(owning funds made up of a combination of investment types)
Corporate and Government Bonds
(loaning money to companies and government agencies
- Your Credit, Your Future
Concepts: Credit Choices; credit reports; finance charges
compound interest: A= P (1 + r/n) nt
simple interest: I = PRT
Advantages:Disadvantages
Immediate possession / overspendingflexibility / Higher costs
safety / Impulse buying
Emergency funds
Character reference
Kinds of Credit (consumer credit is either loan credit(finance a purchase) or sales credit(buy goods and services now, but pay later)
Home Mortgages=long term(30, 25,20,15 years) loans to purchase a house or condoAuto and Consumer Loans=loans for specific items (car with installment payments
Charge Accounts=Department stores: Dillards, Lowes, Boses, Star Furniture (higher interest than the bank or credit union)
Credit Cards= card holder may shop in different places….Visa, Mastercard, Discover Card. May make installment payments
(Not American Express because bill due in full in 30 days)
The cost of a credit card; 90 days interest-free credit; no annual fee; only 1.5 percent interest per month on the unpaid balance; no payments required for 6 to 12 months….
The three C’s of Credit help to create your FICO score…….A good score 700+
- Character – personal qualities of honesty and willingness to repay debts in a timely way
- Capacity - ability to re-pay your debts based on your income sources, how much you earn and your debt/income ratio
- Collateral – assets of value (money in the bank or tangible property (collateral)
The Card Game | FRONTLINE | PBS
- cards/
The Case of the Missing Identity
(What did John Do Wrong”)-Don’t disclose personal info to strangers (especially your social security number); Demand privacy at an ATM(protect your pin number); Shred credit solitation appliciations applications you toss because you changed your mind; When completing a credit bill, precede it with a $sign .00; Beware of unknown recipients on the internet; Don’t send credit application information over an unsecured website………..
Concepts: Fraud; Identity Theft
- Fraud
- Identity theft
- Phishing (The FTC)
- Protect Yourself
(Insurance + pool the risk of an expensive personal injury or property damage risk with others)
Concepts: Insurance
Automobile insurance / Unintentional car damageHealth Insurance / Covers personal and family medical expenses
Dental Insurance / Covers dental expenses(preventive care)
Life Insurance / Provides financial support for dependents in the event of the policy holder’s untimely death
Disability Insurance / Covers personal income when illness or injury prevents the policy holder from working
Property Insurance / Protects personal possessions in the event of fire, flood, theft, natural disasters, etc.
Liability Insurance / Protects a legally responsible individual from unintentionally injuring someone or his or her property
Fiscal Policy:
Congress must pass a law
Taxes (Raise or Lower)
Government Spending (+ -) / Monetary Policy:
Decision by the Federal Reserve Bank:
The Reserve Requirement
The Discount rate (interest rates)
Buy/Sell Bonds