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what is budgeting
the process of creating a plan for how to spend and allocate your income
what is financial planning
involves setting goals and developing strategies to achieve them
pros of budgeting and financial planning
helps you gain control over your finances
enables you to prioritize spending and savings
allows for better decision-making and resource allocation
cons of budgeting and financial planning
requires discipline and regular monitoring
can be time-consuming initially
may involve making sacrifices in certain areas
according to a survey, ____ of american adults do not have a comprehensive financial plan
65%
what are SMART goals?
Specific, Measurable, Achievable, Relevant, and Time-Bound objectives that provide a clear framework for success
what is the “specific” component in smart goals
Goals should be clearly defined and focused
what is the “measurable” component in smart goals
goals should have measurable criteria to track progress
what is the “achievable” component in smart goals
Goals should be realistic and attainable
what is the “relevant” component in smart goals
goals should align with personal values and objectives
what is the “time-bound” component in smart goals
goals should have a specific timeframe for competition
define credit management
effectively managing credit cards, loans, and forms of credit
define debt management
strategies for handling and reducing debt
pros of credit and debt management
access to necessary funds for purchases or emergencies
building a good credit history and credit score
ability to leverage credit for investments or business opportunities
cons of credit and debt management
high interest rates and fees for missed payments
risk of overspending and accumulating excessive debt
potential impact on financial stability future borrowing ability
the average american has over ____ in credit card debt
$6,000
about ___ of americans have overdue medical debt
33%
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
what are bonds
debt instruments issued by governments, municipalities, and corporations to raise capital
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
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
pros for investing for the future
potential for capital appreciation and wealth accumulation
diversification of assets to mitigate risk
opportunity to earn passive income through dividends or interest
cons for investing for the future
market volatility and risk of financial loss
requires knowledge and research to make informed investment decisions
potential lack of liquidity for certain investments
long term stock market returns have averaged around ____ per year
7-8%
only about ___ of americans invest in the stock market
55%
pros of retirement planning
financial security and peace of mind in retirement
ability to maintain a desired lifestyle without relying solely on social security benefits
potential for early retirement or pursuing personal interests in retirement
cons of retirement planning
uncertainty regarding future expenses and healthcare costs
inflation eroding purchasing power over time
challenges of saving enough to meet retirement goals
a survey found that ___ of americans have not calculated how much they need to save for retirement
45%
the average social security benefit in 2021 was around ___ per month
$1,500