business- personal finance

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29 Terms

1
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what is budgeting

the process of creating a plan for how to spend and allocate your income

2
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what is financial planning

involves setting goals and developing strategies to achieve them

3
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pros of budgeting and financial planning

  1. helps you gain control over your finances

  2. enables you to prioritize spending and savings

  3. allows for better decision-making and resource allocation

4
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cons of budgeting and financial planning

  1. requires discipline and regular monitoring

  2. can be time-consuming initially

  3. may involve making sacrifices in certain areas

5
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according to a survey, ____ of american adults do not have a comprehensive financial plan

65%

6
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what are SMART goals?

Specific, Measurable, Achievable, Relevant, and Time-Bound objectives that provide a clear framework for success

7
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what is the “specific” component in smart goals

Goals should be clearly defined and focused

8
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what is the “measurable” component in smart goals

goals should have measurable criteria to track progress

9
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what is the “achievable” component in smart goals

Goals should be realistic and attainable

10
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what is the “relevant” component in smart goals

goals should align with personal values and objectives

11
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what is the “time-bound” component in smart goals

goals should have a specific timeframe for competition

12
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define credit management

effectively managing credit cards, loans, and forms of credit

13
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define debt management

strategies for handling and reducing debt

14
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pros of credit and debt management

  1. access to necessary funds for purchases or emergencies

  2. building a good credit history and credit score

  3. ability to leverage credit for investments or business opportunities

15
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cons of credit and debt management

  1. high interest rates and fees for missed payments

  2. risk of overspending and accumulating excessive debt

  3. potential impact on financial stability future borrowing ability

16
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the average american has over ____ in credit card debt

$6,000

17
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about ___ of americans have overdue medical debt

33%

18
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what are stocks

represent ownership in a company. when you buy a stock, you become a shareholder and have a claim on the company’s assets and earnings

19
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what are bonds

debt instruments issued by governments, municipalities, and corporations to raise capital

20
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what is real estate

lands, buildings, and any natural resources or improvements attached to the land. includes residential properties, commercial buildings, industrial spaces, and underdeveloped land

21
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what are mutual funds

investment vehicles that pool money from multiple investors to invest in a diversified portfolio of securities, such as stocks, bonds, and other assets

22
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pros for investing for the future

  1. potential for capital appreciation and wealth accumulation

  2. diversification of assets to mitigate risk

  3. opportunity to earn passive income through dividends or interest

23
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cons for investing for the future

  1. market volatility and risk of financial loss

  2. requires knowledge and research to make informed investment decisions

  3. potential lack of liquidity for certain investments

24
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long term stock market returns have averaged around ____ per year

7-8%

25
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only about ___ of americans invest in the stock market

55%

26
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pros of retirement planning

  1. financial security and peace of mind in retirement

  2. ability to maintain a desired lifestyle without relying solely on social security benefits

  3. potential for early retirement or pursuing personal interests in retirement

27
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cons of retirement planning

  1. uncertainty regarding future expenses and healthcare costs

  2. inflation eroding purchasing power over time

  3. challenges of saving enough to meet retirement goals

28
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a survey found that ___ of americans have not calculated how much they need to save for retirement

45%

29
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the average social security benefit in 2021 was around ___ per month

$1,500