Financial Lit 1

Financial Aid

Money that helps students pay for education costs (tuition, books, housing).

Grants

Free money for education that does not need to be repaid.

Scholarships

Free money awarded for achievements, skills, or financial need.

Loans

Borrowed money that must be repaid with interest.

Work-Study

A program that provides part-time jobs to help students earn money for school.

SMART Goals

Goals that are Specific, Measurable, Achievable, Relevant, and Time‑bound.

Specific

Clearly states what you want to accomplish.

Measurable

Includes a way to track progress.

Achievable

Realistic based on your resources.

Relevant

Connects to your long‑term plans.

Time‑Bound

Has a deadline.

Career Planning

Identifying career interests, required skills, and steps to reach job goals.

Education Pathways

Options like certificates, apprenticeships, 2-year degrees, and 4-year degrees.

Cost-Benefit Analysis

Comparing the costs of education to the future financial benefits.

Alternative Education Options

Pathways such as certificates and apprenticeships that provide targeted, hands-on training.

Degree Options

Academic pathways including 2-year and 4-year degrees offered by colleges and universities.

Budget

A plan for how you will spend and save your money.

Fixed Expenses

Costs that stay the same each month (rent, car payment).

Variable Expenses

Costs that change (food, entertainment).

Income

Money you earn or receive.

Budget Analysis

Reviewing your spending to adjust habits and meet goals.

Gross Income

Total earnings before taxes and deductions.

Net Income

"Take‑home pay"; earnings after taxes and deductions.

FAFSA Purpose

Determines financial need and unlocks federal aid, Pell Grants, loans, and work-study.

Career vs. Job

A job is short-term work for income; a career is a long-term professional path requiring planning.

Budget Categories

Includes fixed, variable, and discretionary expenses to maintain financial stability.

Budget Variance

The difference between planned and actual spending; positive means under budget.

Payroll Taxes

Taxes like Social Security and Medicare (FICA) that fund federal retirement and healthcare programs.

Income Taxes

Taxes paid to federal and state governments based on earnings to fund public services.

W‑4 Form

Tells employers how much federal tax to withhold from your paycheck based on your status and allowances.

W‑2 Form

Reports annual wages and taxes withheld, required to file your tax return.

Pay Stub Components

Shows gross pay, net pay, deductions, hours worked, and year-to-date totals.

Benefits of Paying Taxes

Taxes fund public goods such as roads, schools, emergency services, and national defense.

Savings Account Features

Offer interest earnings, low risk, easy access, and FDIC/NCUA protection up to $250,000.

Certificate of Deposit (CD)

Locks money for a set term in exchange for higher interest, with early withdrawal penalties.

Stock Definition

Represents ownership in a company with high potential returns and higher risk.

Bond Definition

Loans to governments or corporations providing fixed interest and lower risk than stocks.

Mutual Fund

Pools money from many investors to buy diversified assets, reducing risk through variety.

Real Estate Investment

Purchasing property for rental income or appreciation, requiring high cost and carrying market risk.

Risk vs. Return

Higher potential returns usually come with higher risk; safe investments offer lower returns.

Choosing Financial Institutions

Compare banks and credit unions based on fees, interest rates, accessibility, and tools.

Supply and Demand

Supply is producer output; demand is consumer desire. Prices rise when demand exceeds supply.

Demand Curve

Slopes downward, showing consumers buy more at lower prices and less at higher prices.

Supply Curve

Slopes upward, showing producers supply more at higher prices and less at lower prices.

Capitalism

Economic system where private individuals own businesses and competition drives markets.

Socialism

Government ownership or regulation of major industries aiming for equal resource distribution.

Consumer Protection Laws

Laws like the FTC Act protect consumers from fraud, misleading advertising, and unfair practices.

GDP Definition

Gross Domestic Product measures the total value of goods and services produced in a country in one year.

GDP Components

Includes consumption, investment, government spending, and net exports.

Inflation

The rise in overall price levels over time, reducing purchasing power.

Electronic Bank Transfer

Moves money digitally between accounts using ACH, wire transfers, or online banking.

Check Writing Steps

Requires the date, payee name, numeric amount, written amount, memo, and signature.

Check Register Purpose

Tracks deposits, withdrawals, and balances to prevent overdrafts and maintain accurate records.

Record Keeping

Maintaining receipts, bank statements, and tax documents to track spending and verify transactions.

Fraud Prevention

Protecting financial information using strong passwords, monitoring accounts, and securing documents.

Payment Methods

Options like cash, checks, cards, and mobile payments, varying in convenience, security, and cost.

Managing Accounts

Involves monitoring balances, avoiding overdrafts, reconciling statements, and updating passwords.