Personal Finance and Career Essentials

Flashcards covering personal finance terminology, insurance, investment types, tax forms, and budgeting rules based on the lecture notes.

Gross pay

The amount of money before taxes or other deductions are taken out, calculated as $\text{hourly rate} \times \text{hours worked}$ (e.g., $15/\text{hour} \times 20 = 300$).

Net pay

The amount of money an individual takes home after all deductions have been removed.

Insurance premium

The monthly cost paid to maintain insurance coverage, functioning similarly to a subscription.

Insurance deductible

The out-of-pocket amount an individual must pay before the insurance company begins to cover costs.

IPO

Initial Public Offering; the first time a company is listed on the stock market.

Form 1099

A tax form received by independent contractors who work for themselves and are responsible for withholding their own taxes.

Form W-2

A tax form received by individuals employed by a company.

Bonds

A type of investment that functions as a loan given by an individual to a company or the government.

Savings Accounts

A safe place at a bank to store money while earning small amounts of interest.

Stocks

Buying shares that represent ownership in a company.

Mutual Funds

A collection of stocks and bonds that are managed by professional investment managers.

IRAs

Special accounts with tax benefits designed to help individuals save for retirement.

Risk pool

A large group of people whose premiums cover the losses of the few who need help, allowing insurance companies to spread risk.

Career clusters

Groups of careers that require similar skills or interests.

Diversified portfolio

An investment strategy that includes a mix of different assets, such as stocks and bonds.

Compound interest

A primary reason young people should invest early, as they have more time for their money to grow.

Social Security

A mandatory employer-provided contribution that provides retirement and disability income.

Worker's compensation

A mandatory employee benefit required to be provided by employers.

Friction costs

Additional costs that arise from delays or obstacles.

Indirect cost

A cost that is not paid directly for an activity but is associated with it, such as gas to drive to school.

Direct cost

A cost paid directly for a specific purpose, such as school tuition or fees.

Variable expense

An expense that changes from month to month, such as eating out.

Fixed expense

An expense that does not change every month, such as rent.

Master's degree

A degree typically required for jobs such as a librarian or school principal.

Bachelor's degree

A degree that usually takes $4$ years to complete and is required for jobs like accounting or teaching.

Associate degree

A degree that typically takes $2$ years to earn.

Medicare

Health insurance provided for people aged $65+$ that is automatically deducted from paychecks.

Phishing emails

A method used by identity thieves to steal personal information.

Fringe benefit

Extra perks offered by employers, such as health insurance or paid vacation.

50/30/20 rule

A budgeting guideline where 50$\% of income goes to needs, 30$\% to wants, and 20$\% to savings.

Voluntary deduction

A paycheck deduction that an employee chooses to make, such as a $401(k)$ contribution.

Short-term financial goal

A financial objective intended to be completed within less than $1$ year.

Medium-term goal

A financial objective intended to be completed within a timeframe of $1-5$ years.

Long-term goal

A financial objective that usually takes $5+$ years to achieve.

Form 1040

The specific form used by individuals to file their annual taxes.

Form I-9

A form used to verify an individual's identity and their legal right to work.

Form W-4

A form filled out at the start of a job to inform the employer how much tax to withhold from a paycheck.

SMART goals

A goal-setting acronym standing for Specific, Measurable, Action-oriented, Realistic, and Time-bound.

Credit unions

Nonprofit financial institutions owned by their members that often offer lower loan rates than banks.

Banks

For-profit financial institutions that usually offer higher fees than credit unions.