AVID Final - Financial Literacy

What is the primary difference between a checking account and a savings account?

Checking is for everyday access and use, and savings is for long-term saving and earning interest.

What is a check cashier? Why are they not your best option?

A check cashier is an establishment that exchanges checks. Not the best option since they have high fees and a lack of long-term financial benefits.

What is the major difference between a credit union and a bank?

Banks are for profit, and credit unions are not for profit.

What is the 50/30/20 rule? What percentage belongs to each category?

It is a savings strategy. 50% for needs, groceries, utilities, and clothes. 30% for wants, Netflix, Starbucks, extra clothes. 20% for savings.

At what age does your credit journey start?

Technically, 18 - When you have enough income to pay back what you borrow, and when you feel confident managing your money.

How do you build credit?

Pay bills on time, live within your means, spend wisely -> what you can pay back.

What's the range of a credit score?

300-850

What factors are credit scores based on?

35% Payment History

30% Amount Owed

15% Length of Credit History

10% Type of Credit Used

!0% New Credit

What are some ways to lower the cost of college?

In a state public school, live off-campus and buy groceries. CC first two years. Take AP classes in high school for college credit. Serve as an RA (residential advisor).

What are the different sources of financial aid?

Government, School, and Private foundations.

What are the different types of student loans, and how do they differ?

Federal (from the government), private (banks/lenders), subsidized (need-based, no interest), unsubsidized (all students, interest accrues), and PLUS (for grad students or parents, credit-based).

What is work study?

Work study is a part-time job for college students

True or False: You have a better chance of being awarded a large amount of national scholarship than a small amount from a local organization.

False

True or False: Scholarships have specific eligibility requirements and criteria.

True

What is identity theft?

When someone uses another person's personal information, such as name, social security number, or credit card, without their permission.

What are some things you can do to prevent identity theft?

Secure personal information, shred sensitive documents, and protect with passwords.

What is the fastest-growing financial crime in America?

Identity Fraud/Theft

What is the major difference between subsidized and unsubsidized loans?

Subsidized is when the government pays the interest while you are in college - interest doesn't build up, and unsubsidized is when interest starts accruing immediately after the money is disbursed.

True or False: Federal loans are almost always cheaper than private loans.

True

What is a W-4, and what is its purpose?

A W-4 is an employee's withholding certificate. The employee is completed to inform their employer of the correct amount of federal income tax to withhold from their paycheck