Personal Finance Exam Review

Need

something that is necessary to live (food)

Want

something that makes the quality of life better (Harry Styles concert tickets)

S

specific

M

measurable

A

attainable

R

realistic

T

time bound

Three savings tools

checking, money market, and savings

General relationship between risk and rate of return

the higher the risk the higher the return

three investment tools

stock, real estate, and bonds

Advantages to a credit card

easy to access, helpful in an emergency, can but large purchases

Disadvantages to a credit card

must keep track of, easy to overcharge, and late fees

Three main credit reporting agencies

Equifax, Experian, and Trans Union

Four sources of credit information

the bank, credit summary, credit inquiry, and public information

Three potential requestors of a person’s credit report

land lords, people who collect student loans, and banks

What are the two types of credit

revolving (credit card) and installment (loan)

Benefits of a high credit score

lender knows that can handle money, lower interests, more credit opportunities

Purpose of insurance

to transfer risk from you to your insurance company

Who can pay for your insurance

you, the government, your employer

Which of the four types of insurance is the most important

uninsured because it protects you in case of an accident and the other person isn’t insured

What influences auto insurance rates

age, gender, and marital status

What does health insurance cover

physicals, doctor visits, and mental health

Coverages for those who cannot work/live independently

Disability Insurance