Financial Literacy

Federal Form W-4

Form employees fill out to tell employers how much federal tax to withhold.

Who pays Social Security Tax

Employee and employer

Who needs a work permit

Minors usually under 18 depending on state law

Social Security Act

Law that created Social Security benefits for retirees, disabled workers, and survivors.

Medicare

Federal health insurance for people 65+ and certain disabled individuals.

Worker's Compensation

Insurance that pays medical bills and lost wages for job-related injuries.

Family Medical Leave Act

Allows eligible workers up to 12 weeks of unpaid, job-protected leave for family or medical reasons.

Gross Pay

Total earnings before deductions

Net Pay

take home pay after deductions

Overtime Rate

usually 1.5x for hours over 40 per week

Salary vs. Hourly Wage

salary is fixed yearly pay and your hourly is how much paid per hour worked

Required Deductions (list what must be deducted from paycheck)

Federal income tax, state income tax (if applicable), Social Security, Medicare.

Progressive Tax

Tax scaled with income

Exemption

income that's not subjected to taxes

Taxable Income

Income after deductions and adjustments.

Tax Credit

Directly reduces taxes owed

W-2 form

Shows yearly earnings and taxes withheld by employer.

Form 1040

Main federal income tax return form.

Savings account

Account for saving money and earning interest. Usually very little interest

Checking account

Account for daily spending (debit cards, checks).

Check endorsement

Signature on the back allowing a check to be deposited or cashed.

Compound Interest

Signature on the back allowing a check to be deposited or cashed.

Credit Unions

Member-owned financial institutions, often with lower fees.

Certificate of Deposit (CD)

Savings account with fixed term and higher interest; money locked in.

Creditor

Person or company that lends money.

Capital

Money or assets used to generate income.

Finance Charge

Cost of borrowing (interest + fees).

Open ended credit

Credit with no fixed end date (credit cards).

Closed end credit

Loan with fixed payments and end date (car loan).

Service credit

Credit for services received before payment (utilities, phone).

APR

Annual Percentage Rate; yearly cost of borrowing.

Credit bureau

Company that collects credit data

Three C's of Credit

Character, Capacity, Capital.

FICO Score

Credit score used by lenders (300-850).

Biggest factor that affects your credit score

Payment history.

Credit Report

Record of borrowing and repayment history.

Identity Theft

When someone uses your personal info to commit fraud.

Other costs associated with ownership

Fuel, maintenance, insurance, registration, repairs.

VIN

Vehicle Identification Number; unique ID for a car.

Liability insurance

Covers damage/injury you cause others (required).

Comprehensive insurance

Covers non-collision damage (theft, weather).

Collision insurance

Covers damage to your car from accidents.

At

fault state - Driver who is at fault pays for the damages.

Premium

Amount paid for insurance.

Deductible

Amount you pay before insurance covers the rest.

Landlord

Owner renting out property.

Tenant

Person renting the property

Security deposit

Money held to cover damages or unpaid rent.

Lease

Legal rental agreement.

Eviction

legal removal of tenant

Mortgage

Loan to buy property.

Equity

Value of ownership in a home (home value − loan).

Escrow

Account holding money for taxes and insurance.

Until what age can you stay on your parents insurance?

26

Affordable Care Act

Law expanding health insurance access and protections.

Medicare

Federal health insurance for seniors and certain disabled individuals.

Term life insurance vs. whole life insurance

Term: coverage for set time; Whole: lifetime + savings.

Public corporation

Company owned by shareholders; stock is publicly traded

Dividends

Payments to shareholders from company profits.

Volume

Number of shares traded in a period.

FAFSA

Form to apply for federal financial aid.

Scholarships

Free money based on merit or criteria.

Grants

Free money usually based on financial need.

Subsidized vs unsubsidized loans

Subsidized: government pays interest while in school; Unsubsidized: you pay interest.