Performance Indicators Personal Financial Literacy

DIFFERENTIATE BETWEEN PRINCIPAL AND INTEREST

Principal is the money originally agreed to pay back. Interest is the cost of borrowing the principal, which varies based on interest rates and consumer credit score

DIFFERENTIATE BETWEEN ADJUSTABLE AND FIXED RATE MORTGAGES

A fixed rate mortgage charges a set rate of interest that does not change throughout the life of the loan. The initial interest rate on an adjustable rate mortgage is set below the market rate and then the rate rises or lowers as time goes on.

IDENTIFY FACTORS THAT INFLUENCE THE COST OF RENTER'S INSURANCE AND HOMEOWNERS' INSURANCE

Renter's insurance and homeowers' insurance costs are influenced by the amount of coverage, location, deductible and cost to rebuild

EXPLAIN THE IMPORTANCE OF LICENSING, CERTIFICATIONS, EDUCATION, AND EXPERIENCE AS CRITERIA FOR SELECTING A FINANCIAL PROFESSIONAL FOR INVESTMENT MANAGEMENT OR ADVICE

The lack of those credentials could lead to investment fraud. Some warning signs of investment fraud include: high pressure sales tactics, promises of high profits, claims of no risk, not allowing questions, and claims that investments do not have to be registered.

DISCUSS HOW PERSONAL FINANCIAL DECISIONS CAN AFFECT OTHER PEOPLE

Choosing to spend more money than earned can result in the ability to pay household bills which affects roommates. Taking on credit/loans affects credit score which is important when wanting to make large purchases such as automobiles and homes. Making poor investments or spending friviously can result in less money for needed expenses.

DIFFERENTIATE BETWEEN GROSS, NET AND TAXABLE INCOME

Gross income includes all income you receive that is not explicitly exempt from taxation under the Internal Revenue Code. Taxable income is the portion of your gross income that is subject to taxation. Net income is the amount earned after taxation and other various deductions.

EXPLAIN THE DIFFERENCE BETWEEN A DEBIT CARD AND A CREDIT CARD

When a debit card is used, the funds for the amount of the purchase are taken from the assigned checking account in real time. When a credit card is used, the amount is charged to the line of credit and the bill we paid at a later date, which allows more time to pay.

EXPLAIN WHY PEOPLE SHOULD EVALUATE EMPLOYEE BENEFITS IN ADDITION TO WAGES AND SALARIES WHEN CHOOSING BETWEEN JOB AND CAREER OPPORTUNITIES

Examples of employee benefits include various types of health insurance, life insurance, disability insurance, retirement plans, pre-tax savings accounts for health spending and childcare. These benefits all take some burden of spending off of the employee. Other employee benefits such as flexible schedules, paid time off and bereavement leave allow employees to be paid while not working in a traditional environment, while out of the office or allowing time away from working with pay.

IDENTIFY THE MAIN FACTORS THAT ARE INCLUDED IN CREDIT SCORE CALCULATIONS

Factors that affect a credit scoring system include: payment history, credit history, credit usage, total balances, credit checks and available credit.

DESCRIBE THE IMPACT OF INFLATION ON PRICES OVER TIME

Inflation reduces purchasing power over time.

RECOMMEND INSURANCE FOR THE TYPES OF RISKS THAT YOUNG ADULTS MIGHT FACE

Young adults might rent or own property and will need renters' or homeowners' insurance. Young adults might own a vehicle and need automobile insurance. Health insurance is needed if not under parent's plan. A young adult may need personal property insurance if they own expensive jewelry, artwork or other belongings.