Introduction to Personal Finance

These flashcards cover key concepts related to personal finance, including income, taxes, and savings strategies.

What should you ensure with your income by the end of every month?

You need to have a surplus.

What do you call it when expenses exceed income?

Deficit.

What does the term 'assets' refer to?

Things that you own.

What is the recommended savings ratio for individuals under 30?

Twelve percent.

What is payroll deduction?

When an employer automatically takes money from your paycheck for savings or retirement.

What term describes all sources of money obtained by individuals and households?

Income.

What is a wage?

Compensation paid to an employee typically on an hourly basis.

What do you call the amount paid for working over 40 hours in one week?

Overtime.

What is unearned income?

Income generated from investments without additional work.

What is a dividend?

An investor's share of the profits from a company.

How long must you pay into Social Security to receive benefits?

At least ten years.

What is the IRS responsible for?

Collecting and enforcing tax laws.

What type of tax is applied at the point of sale?

Sales tax.

What is the standard tax form used to file taxes?

Form 1040.

Which form summarizes an employee's earnings at the end of the year?

W-2 form.

What occurs when you sell an asset for more than you paid?

Capital gain.

What is a tax credit?

A dollar-for-dollar reduction in your tax liability.

How does increasing the number of allowances affect your paycheck?

It decreases the amount withheld for taxes.

What might you qualify for if too much tax has been deducted from your paycheck?

Tax refund.

What do deductions from gross income refer to?

Expenses not included in gross income that can lower your taxable income.

What is the purpose of savings accounts according to the lecture?

To build an emergency fund and manage future expenses.