Prin Fin Lit

UTHS - from quizzlet

Advantage of renting a home

Renters avoid maintenance costs, unlike homeowners who handle repairs.

Percentage of Americans owning homes

About 64%.

Example of a non-liquid investment

A home. Homes are non-liquid because they cannot be quickly converted to cash without significant time or cost.

Home ownership vs renting cost

Home ownership is cheaper than renting in the long term. Over time, owning a home builds equity and avoids rent increases, unlike renting.

Loan terms for cars

Loan terms for cars can be as long as 72 months. Car loans can extend up to 6 years.

Description of a liquid asset

Easily converted into cash. Liquid assets, like checking accounts, can be quickly accessed, unlike homes or retirement funds.

Circumstances for losing money on a home

Bought in a small town just before the town's top employer closes. This can decrease property values due to economic decline.

Disadvantage of credit unions

More credit card awards. Credit unions typically offer superior service, higher interest on deposits, and lower fees, but not more credit card rewards.

Bank account type with fees

Checking. These fees are commonly associated with checking accounts.

Reason for investing money

To earn interest. Investments generate returns through interest, dividends, or capital gains.

Miracle of compounding interest

Tiny amounts can grow to large sums given enough time. Compounding allows earnings to generate more earnings over time.

Percentage of Americans believing they will retire by age 65

29%.

Common retirement account in public sector

Pensions. Public sector jobs often provide pensions, unlike private sector reliance on 401(k)s.

Meaning of 'fixed' income for retirees

It doesn't really go up. Fixed income, like pensions, remains stable but may not adjust with inflation.

Greatest risk expense for retirees

Medical expenses. These can be unpredictable and significant in retirement.

Suzy's financial decision

Pay off the credit card first, then use the excess for an IRA. High-interest debt costs more than potential investment returns.

Aaron's retirement account choice

401(k). Employer matching doubles contributions, unlike a Roth IRA, which offers flexibility but no match.

Johnny's financial decision

Pay the car payment. Missing payments incurs late fees and hurts credit scores, prioritizing debt over entertainment.

Hillary's spending advice

Devote it to an emergency fund, then an IRA. Savings protect against emergencies, and retirement savings ensure long-term security.

Bank statement category for checks

Debits. Debits reflect money withdrawn, like checks.

Wages deposited into checking account

Your net income will appear as a credit. Net income (after deductions) is credited to the account.