Personal Finance unit

Social Security Number

A 9-digit number used for taxesIts #1 target for identity theft 

How to write a check (6 steps)

• Write the date.

• Write the payee’s name.

• Write the amount in numbers.

• Write the amount in words. Make sure it matches the numbers.

• Fill in the memo (optional).

• Sign the check.

Strong Password

A password that uses uppercase and lowercase letters, Use UPPER CASE & lower case letters & #s & symbols.

• Have similar/same passwords for groupings like banking/credit info

Encryption

Scrambles data so only the intended recipient can read it. Used in messaging apps

Phishing

Fake emails/texts/sites that trick you into giving up personal info. Red flags include urgency, suspicious links, and requests for passwords or SSNs.

VPN (Virtual Private Network)

A tool that shields your browsing info and hides your location. Prevents hackers and companies from tracking what you do online.

Good Resume (Do's)

Use action verbs, tailor to the job, highlight relevant skills, keep contact info visible, and make it visually appealing. Achievements should show specific impact and value.

Good Resume (Don'ts)

Avoid clutter Avoid clutter, overly personal details, outdated info, lies, and long paragraphs. No photo of yourself, no irrelevant information.

Typical Resume Sections

Education experience, Skills, Contact Info, Resume Summary, and Additions (extracurriculars, languages, volunteer experience).

Common Resume Mistakes

Don't lie or exaggerate. Avoid bogus degrees, embellished job titles, and exaggerated language proficiency.

Experience Paradox

The chicken-or-egg dilemma where you can't get a job without experience but can't get experience without a job. Solve it by using internships class projects, and emphasizing willingness to learn.

Strong Action Verbs

Words that show what you did effectively on a resume (e.g. managed, advised led, developed, created). They enhance your accomplishments and strengthen your application.

Skills vs Attributes

Skills are teachable abilities relevant to the job (e.g. coding, Excel). Attributes are personal qualities developed over time (e.g. hardworking, adaptive).

ATS (Applicant Tracking System)

Software that scans resumes for keywords to filter out unqualified candidates before a human reviews them. Use strong action verbs and job-specific vocabulary to pass it.

Cover Letter AIDA

Attention: hook the reader with an opening line. Interest: connect past experience to the role. Desire: show genuine interest. Action: end with something about the future/next steps.

Typical Interview Questions

Common questions include: describe something you are passionate about, what are your strengths and weaknesses, and where do you see yourself in five years? ,

College Ways to Make Money

Babysitting barista, tutor, Resident Advisor (RA), and campus ambassador roles. Also side hustles, part-time jobs, and internships

50/30/20 Rule at College

50% needs, 30% wants, 20% savings. Use student discounts and meal plans, track spending with apps, and automate the 20% savings category.

College Amenity Costs

Higher tuition maintenance costs, and higher teacher salaries. Rising tuition is driven by increased demand for college degrees

College Amenity Benefits

Enhanced campus life, social opportunities, and access to resources like career centers.

Adjunct Professors

Part-time professors paid less than full-time faculty

Degree Stigmatization

Many jobs now require a college degree even when not necessary. People without degrees face social and professional barriers and lower pay

Decreased Government Funding

Colleges pass costs to students through higher tuition and fees

Sticker Price vs Discount Price

Sticker price is the public list price (what you'd pay in full). Discount price is the actual cost after financial aid

Elite School Sticker Price Perception

Elite schools are perceived as better quality and more prestigious based on their high list prices. However many offer generous financial aid so actual cost may be much lower.

Biden's SAVE Plan

Aimed to reduce student loan payments to 5% of discretionary income and raise the income exemption threshold

How Banks Make Money

Banks charge interest on loans, collect fees (ATM, overdraft, account fees), and invest deposited money. They pay low interest on savings but charge higher interest on loans to make a profit.

Benefits of Using a Bank

Safety (FDIC insured), convenience, ability to earn interest on savings, security (safer than keeping cash), and easy payments.

Direct Deposit

A form you fill out so your employer sends your paycheck electronically directly into your bank account

Balance

The amount of money currently in your bank account.

Checking Account

Used for everyday purchases

Savings Account

An account meant for storing money rather than daily spending. Earns interest over time so your money grows.

Bouncing a Check

When a bank rejects a check because the account has insufficient funds when the recipient tries to deposit it. Results in NSF fees.

Certificate of Deposit (CD)

A low-risk savings account that offers a fixed interest rate on a lump sum deposit for a set term. You deposit money for a specific period and the interest rate stays the same throughout.

How to Write a Check

Fill in: date

Debit Card

Takes money out of your account immediately. You can only spend what is currently in your account.

Credit Card

Charges are billed at the end of the month. You can spend more than what is in your account but must pay it back.

Standard Credit Card

A normal credit card that requires no deposit and needs a good credit score to be approved.

Secured Credit Card

Requires a cash deposit as collateral. Ideal for people with poor or no credit history. Lower risk for the lender and helps build credit score.

Credit Score

A score based on: payment history (35%), length of history (15%), credit mix (10%), new accounts/inquiries (10%), and debt payment. Higher is better (300-850 scale).

Credit Utilization Ratio (CUR)

Total balance divided by total credit card limit. Keep it under 30%

When to Get a Credit Card

When you have a job and money saved up along with self-control, time management, and organizational skills.

Annual Fee

A yearly fee charged just for having the credit card

Application Fee

A one-time fee charged when you apply for the card. Not all cards have this.

Finance Charge (APR)

The interest you pay when you don't pay your full balance

Balance Transfer Fee

A fee for moving debt from one credit card to another. Usually a small percentage (3-5%) of the amount transferred.

Late Payment Fee

A fee charged if you miss your payment due date. Also hurts your credit score.

Housing: Live with Parents

Price: none. Maintenance: chores. Freedom: not much. Privacy: poor. Equity: no ownership.

Housing: Rent Apartment

Price: good if you have a roommate. Maintenance: good (landlord fixes appliances and building). Freedom: average (under landlord's rules). Privacy: good. Equity: no ownership.

Housing: Buy a Condo

uy a Condo, Price: average ($400,000 is Boston average). Maintenance: average (must fix broken appliances but not whole building). Freedom: good. Privacy: good. Equity: excellent.

Housing: Buy a House

Buy a House, Price: poor (depends on down payment and mortgage). Maintenance: poor (lots of work, must fix all repairs). Freedom: excellent. Privacy: excellent. Equity: excellent.

Fixed-Rate Mortgage

A mortgage where the interest rate does not change for the life of the loan. Predictable monthly payments.

Adjustable-Rate Mortgage (ARM)

A mortgage where the interest rate changes over time based on the federal reserve rate. Can go up or down.

Costs of Buying a Home

Location, purchase price, utilities, property taxes, maintenance, mortgage, and insurance.

Car Costs

Buying or leasing, gas, insurance, parking, and excise tax. Leasing is generally not recommended: repairs are more expensive, accidents cause complications, and limitations delay the inevitable.

First Car to Buy

Used, big (absorbs more impact), boxy (low center of gravity), and boring (less likely to get stolen). Not flashy.

Invoice Price

What the dealer actually paid for the car. Bargain UP from this — your goal is to pay as little above invoice price as possible.

MSRP

Manufacturer's Suggested Retail Price — the sticker price. Bargain DOWN from this — your goal is to pay less than the sticker price.

Car Negotiating Tactics

o your research, be willing to walk away and come back the next day, don't get distracted by add-ons, and start low

Leasing a Car

Costs: repairs more expensive, accident complications, mileage limitations, and delays the inevitable purchase. Generally not recommended for first car.

Factors Influencing the Stock Market

GDP data, new home sales, Federal Reserve data, interest rates, corporate earnings, weather, wars, natural disasters, and elections or deaths of political leaders.

Stock

A piece of ownership in a company. For example owning a Pepsi stock makes you a part owner.

Share

Each individual unit or slice of ownership in a company.

Equity

Ownership in a company

Blue Chip Stocks

Blue Chip Stocks, Stocks of big, established, long-standing companies with a market cap of $10 billion or more. Lower risk.

Growth Stocks

Stocks expected to grow at an above-average rate compared to other companies, typically reinvesting earnings to expand rather than pay dividends.

Penny Stocks

ery low-priced stocks. High risk, often speculative or scams.

Market Capitalization (Market Cap)

How much the company is worth. Calculated as: price of stock x total shares outstanding. Higher is better.

Common Stock

Gives voting power in big company decisions. Dividends depend on the company. Gets leftover money last (more risk). Cheaper to buy.

Preferred Stock

No voting rights. Entitled to fixed dividends. Safer form of investment. More expensive to buy.

Dividends

Chunks of money paid out to shareholders over time.

Proxy

Voting on behalf of a shareholder who cannot attend. As a part owner you could vote or have someone vote on your behalf by absentee ballot.

Be Long (Investing)

Buy low and sell high. Wait for the stock price to rise to earn a capital gain.

Sell Short (Investing)

Sell high first, then buy the stock back later at a lower price if you expect the price to drop.

Costs of Buying Stock

Opportunity cost risk of loss, time to research, and lack of knowledge.

Schahlerland Process

A 4-step process for picking stocks: 1) Analyze the macroeconomic situation (unemployment, inflation, market). (2) Analyze the industry (regulations, new tech, new data). (3) Analyze the company (is it run well, profitable, does it have patents?). (4) Analyze the stock (daily price changes).

HIGHER Market Cap (Ratio)

Total value of a company. Higher is better.

HIGHER EPS (Earnings Per Share)

Total net earnings divided by outstanding shares. Shows how profitable the company is split into pieces. Higher is better.

LOWER P/E Ratio (Price to Earnings)

Price of stock divided by earnings. Shows if company is under or overvalued. Lower is better.

LOWER P/B Ratio (Price to Book)

Price of stock divided by total assets. Shows if company is under or overvalued. Lower is better.

LOWER P/S Ratio (Price to Sales)

Price of stock divided by total sales (revenue). Shows if company is under or overvalued. Lower is better.

LOWER D/E Ratio (Debt to Equity)

Total liabilities divided by value of company (market cap). Shows risk. Lower is better.

Bull Market

A market where investments increase in value and investors are making money. Positive rate of return.

Bear Market

A market where investments decrease in value and investors lose money. Negative rate of return.

Mutual Fund

A pool of money from many investors managed by professionals. Benefits: diversification

Index Fund

Tracks a specific market index like the S&P 500. Benefits: low fees

ETF (Exchange Traded Fund)

Holds a mix of investments that you can trade like a stock. Benefits: trade anytime during the day

Bond Interest Rate

The percentage the bond pays you each year based on its face value. This is what you earn.

Face Value / Principal (Bond)

The amount the bond is worth and what you get back when it matures.

Maturity Date (Bond)

The date when the bond ends and the issuer pays back the face value to you.

Corporate Bonds

Debt securities issued by a corporation to raise capital, promising to pay periodic interest and return the face value at maturity.

Municipal Bonds

Municipal Bonds, Issued by state and local governments. Medium risk, medium return. Often tax-free which benefits high-income investors.

Federal Bonds

Issued by the U.S. government. Lowest risk and lowest return. Essentially impossible to default because backed by U.S. government credit. Used to fund roads, bridges, and public services.

Costs of Buying Bonds

Lower rate of return than stocks, risk of default if company or government can't pay, inflation risk, and not ideal when you're young and could take more risk.Investing in bonds typically comes with a series of potential drawbacks, such as lower returns compared to stocks, the possibility of default by the issuer, and exposure to inflation risk, making them less favorable for younger investors who can afford to take on more risk.

Benefits of Buying Bonds

Guaranteed profit, longer maturity means more money, can sell higher than you paid, safest form of investment overall, and adds diversification to a portfolio.

Greying Problem

Baby boomers retiring en masse means fewer workers paying into Social Security and more people drawing from it

Three-Legged Retirement Stool

The three sources of retirement income: personal savings, pensions and social security

401k

A retirement savings plan for private sector (for-profit company) employees. Contributions are pre-tax and employers often match.

403b

A retirement savings plan for public school employees and nonprofits.

457

A deferred compensation retirement savings plan available to local and state government employees and certain nonprofit workers.